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This material is marketing communication
Before making any final investment decisions, please read the prospectus, its Annual Report, and the KIID of the relevant Sub-Fund here
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Print
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Overall, September was a poor month for the stock markets because of concerns about high inflation and how this will impact consumers' purchasing power. The 4% rise in 10-year US interest rates, the key parameter, created unease that dragged the equity markets down. Working as an asset manager in this environment is particularly challenging as rising market interest rates push counteract company share prices. Regardless, we do see signs of some inflation components slowing down, which suggests some better times ahead. Soon, a new reporting season will kick off, and we hope for a repeat of the second quarter season, with robust reports that can lift the market.
In September, Coeli Global Small Cap Select's performance was -11,82%, coming in 4,01 percentage points short of our benchmark.
The shares that performed the strongest during the month were Marlowe, Ameresco, and Alarm.com. Marlowe is an exciting company providing, among other things, compliance services. Operating in the UK, the company can be seen as a serial acquirer. Those showing the weakest performance during the month were Truecaller, Staar Surgical, and Vitec Software. Truecaller is in the midst of tough times, with a handful of hedge funds seemingly wanting to discredit the company by issuing "short-seller reports". In our view, Truecaller's management is trustworthy in its communication and the company has a solid business model that generates appealing profits.
The large currency movements in the US dollar were behind some of the deviations for the fund in September. A relatively large share (some 26%) of our fund's capital is in Swedish small caps. As the dollar strengthened, the fund's returns declined on a relative basis. On the other hand, a weakening dollar will be good for the fund.
Key market events and trends (what has influenced performance most?)
The US Fed raised interest rates once more, by 0.75 percentage points, a move the stock markets greeted with a relatively strong negative reaction. At the press conference, Jerome Powell stated his determination to reduce inflation to 2%. We believe the Fed is using its strong interest rate increases of the summer to cool down a pretty heated US economy. As capital becomes pricier (higher interest rates), demand for goods, services, and labour diminishes. The US currently has too low unemployment and Powell believes this needs to rise to avoid excessive wage inflation. And through interest rate increases, he also wants to slow the hike in property prices. Sweden's Riksbank does not want to do worse and lifted interest rates by 1% to reduce inflation in the long term to its 2% target.
As we mentioned earlier, we have experienced an especially strong dollar, surpassing SEK 11.30 - its highest level since 2001. And regardless of how strange this sounds, the lack of dollars in the world just makes it more expensive. As a result of the Fed's tightening of monetary policy to reduce inflation, the number of US dollars has come down. The US monetary policy has the opposite effect in Sweden: as the dollar strengthens, Sweden sees so-called imported inflation (goods bought in dollars become more expensive in Swedish kronor), driving up prices in Sweden.
Portfolio changes
We made two changes during September. We sold German real estate company VIB Vermögen following its joint venture with a fellow German real estate firm of lower quality. In its place, we bought Brazil's Magazine Luiza, which is growing rapidly in e-commerce.
The fund's positioning - our market expectations
Following the month's decline, we consider the holdings in Coeli Global Small Cap Select to have more appealing valuations. Our small cap fund has a P/E of around 21x next year's profits and aggregated profit growth in the portfolio surpasses 23%. The fund's PEG-ratio (relationship between valuation and profit growth) is thus below 1. Given the excellent quality of our companies, this is low. Remember, the best stock transactions are made in the worst of times.
News
For the first time, we will present all the fund's holdings. You can find a list of all our exciting entrepreneurially driven companies with the email that is sent our with our newsletter.
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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 | 6 of 7 |
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Top Holdings (%)
| VITEC SOFTWARE GROUP AB-B | 4,4% |
| ENERGY RECOVERY INC | 4,1% |
| TITAN MACHINERY INC | 4,0% |
| COMFORT SYSTEMS INC | 3,8% |
| AMERESCO INC | 3,7% |
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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 KIID 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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