Portfolio Manager comment Coeli Global Select June 2021

For June, the return for Coeli Global Select was 5.38 percent, beating the benchmark by 0.82 percentage points. The month’s three best performers were NVIDIA, Pagseguro, and Adobe, while the worst performances were by Fiserv, Kotak Mahindra Bank, and Traton. NVIDIA performed thanks to positive news about its potential acquisition of the UK’s ARM, with the CEO of ARM reacting positively to the prospective acquirement. Brazil’s Pagseguro also had a great month, its interim report revealing a 30 percent increase in revenue during the quarter. Stock market sentiment has also changed, with shares in developing markets back in favour, which has bolstered Pagseguro. Adobe saw a strong month thanks to an excellent report that included revenue growth of 23 percent, surpassing expectations.

Key market events and trends (what has influenced performance most?)

One robust trend that had continued for some time is the large number of IPOs in Sweden and beyond. After looking through a number of prospectuses, we have, in many cases, declined to invest, considering the prices too high. We have the feeling that many have wanted to list and take advantage of the strong momentum in the equity markets.

The US 10-year government bond yield has declined further and is now around 1.43 percent, implying that the fixed income market believes in moderate future inflation. Low interest rates help the equity markets and offer support to companies with higher valuations and high growth. A further bright spot is that US unemployment has come down from the astronomical 19 percent recorded in May to a more manageable 5.9 percent. Another positive for the equity markets is that the PMIs for both the US and Germany remain at higher levels, suggesting optimism for the future and the economy. During June, the G7 leaders met in Cornwall to discuss, among other topics, a 15 percent global minimum tax on corporate profits. Ireland is one of the countries in Europe that will be affected by this, having used low taxes to entice companies to establish themselves in the country and thus create jobs.

Portfolio changes – with brief comments

Our portfolio was unchanged during June.

The fund’s positioning – our market expectations

As our portfolio construction of the world’s best companies continues according to our plan, we haven’t needed to make any changes over the past three months. Our strategy to beat our benchmark is to deliver a return of 15 percent per year over time, measured in Swedish kronor (SEK). Looking at our current portfolio, we see estimated profit growth in our companies of almost 25 percent from 2021 to 2022, signifying this is a realistic goal for future returns.

We in the Coeli Global team – Andreas, Henrik, Johan, Jessica, and Max – wish all our clients a wonderful summer!