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This material is marketing communication
Before making any final investment decisions, please read the prospectus, its Annual Report, and the KID of the relevant Sub-Fund here
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The performance of Coeli Global Small Cap Select during October was -8.15%, which was 2.23 percentage points short of our benchmark index. The reason for the equity market decline during the month was largely that the fixed income market retains its grip on the stock market. Current interest rate levels make bonds a realistic alternative to equities, with the consequence that money flows from equities to fixed income. The high interest rates levels also mean a general global economic slowdown.
The strongest performers during the month were YouGov, Nordnet, and Lime. The stocks with the weakest performance were Asbury Automotive, Eurogroup Laminations, and Magazine Luiza.
All three that performed the best also released good reports that surpassed market expectations. Among our top three for the month, Nordnet beat consensus for sales by 30%, for example. The Lund-based company Lime published a report showing that it can grow even in tough times. Its revenue growth was 19%, demonstrating the company's solid progress in growing its business in the Nordic region and beyond. UK market research company YouGov reported revenues growing 17% alongside higher margins versus previous quarters.
Key market events and trends (what has influenced performance most?)
"Higher for longer" is the financial market's new buzzword, referring to the possibility that central banks may have to maintain key interest rates higher for longer than previously thought to combat inflation. From an equity fund manager's point of view, we believe the "interest rate peak" is near, and that there is likely to be only one more hike in December. This view is based on two factors: inflation is actually dropping and indications from the construction and real estate companies. High interest rates mean real estate companies' financing costs have skyrocketed, impacting their profitability. Construction companies' order books have decreased dramatically, forcing them to make staff redundant, contributing to higher unemployment and meaning newbuilds are slowing down. Although the central banks are focusing on combatting inflation, they cannot close their eyes to what is happening to the economy, with lower demand as a result, and consumers with substantially flimsier wallets. All in all, this affects stock market prices, which are thus supported by future expected growth in company profits. When earnings expectations drop, so too do share prices. Expanding profits are a particularly important factor to us, as we know they are one of the largest contributors to rising share prices in the long term.
Portfolio changes
During the month, we bought into four new companies and sold an existing holding. This latter was Incap, which had fallen into a negative trend as customer demand dropped significantly. We added Auto Partner, Eagle Materials, and Doximity to our Champions. Auto Partner is a Polish company that sells spare parts for cars in Poland and elsewhere in Europe. Eagle Materials is a US company making its money by selling cement and plasterboard panels. As it is difficult to obtain authorization for new factories in this field, it is the local monopoly that sets the company apart. Doximity can be considered a LinkedIn for staff in the healthcare sector. The company has, among other things, seen impressive revenue growth since its listing in 2021.
Mandatum is a spin-off from the renowned Sampo that joins the Special Situations part of our fund. Mandatum is a Finnish firm that focuses on asset management, life insurance, and pensions.
The fund's positioning—our market expectations
As of the end of October, we had 44 holdings in the fund, with Champions representing 82% of the fund and Special Situations 18%. Based on next year's expected profits, our global small cap fund's P/E is 17.5x, and we expect profits to grow by almost 17% during 2024. The expected revenue growth for our portfolio in 2024 is 12%, which can be compared with the IMF's forecast of 2.9% global GDP growth for 2024.
We believe we have an appealing portfolio that should generate returns for unitholders. We believe small caps are an interesting asset class at present, thanks to their particularly attractive valuations.
We thank you for trusting us to manage your money.
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Coeli Global Select
| Performance in Share Class Currency | Mth | YTD | 3 yrs | Since incep |
| Coeli Global Select - R EUR | 17,50% | -10.20% | 45.98% | 133.44% |
| Benchmark | 9.98% | -4.65% | 39.47% | 109.07% |
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Andreas Brock, CFA
Portfolio Manager Coeli Global Select
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Henrik Milton
Portfolio Manager Coeli Global Select
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Fund Overview
| Inception Date | 2022-03-28 |
| Management Fee | 1.4 % |
| Performance Fee | Yes, 10% |
| Risk category | 4 of 7 |
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Top Holdings (%)
| MEDPACE HOLDINGS INC | 4,1% |
| ASBURY AUTOMOTIVE GROUP | 3,7% |
| NORDNET | 3,6% |
| ARGAN | 3,4% |
| CATENA | 3,2% |
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DISCLAIMER. This is a marketing communication.
Before making any final investment decisions, please refer to the prospectus of Coeli SICAV I, its Annual Report, and the KID of the relevant Sub-Fund. Relevant information documents are available in English at coeli.com. A summary of investor rights will be available at
https://coeli.com/regulatory-information-coeli-asset-management-ab/.
Past performance is not a guarantee of future returns. The price of the investment may go up or down and an investor may not get back the amount originally invested.
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