Newsletter Equity Funds 31/10 2023
Market development
- The war between Israel and Hamas was closely followed by the markets but had a limited impact on developments. The market’s focus was on oil price developments and the risk of an escalated conflict with broader involvement with the United States and Iran.
- Interest rates continued to rise during the month. The yield on U.S. 10-year Treasuries nearly touched 5% after strong job market figures.
- As expected, the ECB kept its key interest rate unchanged and signalled that it does not currently see any reason for further hikes in the future. Preliminary Euro area inflation came in lower than expected at 2.9%, supporting the centralbanks stance.
- The earnings reports have generally been disappointing, at least judging by the market’s reactions, but reported figures in relation to expectations have also been good.
- GDP growth for the third quarter in the US and China, the world’s two largest economies, surprised on the upside with an annual growth rate of 4.9% and 5.3%, respectively, compared to the previous quarter. In both cases, high private consumption was behind the surprises.
Simplicity Norden
Development
The fund weathered the stock market decline well, with a much smaller decline than the fund’s index. AAK followed up a positive earnings outlook with a good report showing a significantly improved operating margin. Novo Nordisk continued to its recent success during the month. A clinical study on Ozempic’s effect on kidney failure could be discontinued earlier than planned after clearer results than expected. Furthermore, the pharmaceutical giant released a sharply increased forecast for sales and operating profit.
Larger portfolio changes
The weight in industrial companies declined slightly, partly due to profit-taking in ABB, which is still a larger holding. The weight increased in the banking sector due to added position in Nordea.
Returns as of 2023.10.31
- -2.0%
- -3.0%
- 6.7%
- 0.8%
Monthly report
Simplicity Sverige
Development
The fund fell but performed relatively well during a weak month for Swedish equities. The return of -2.5% was better than the -3.5% performance of the index. The fund’s stable consumer companies contributed with positive returns. AAK followed up a positive earnings outlook with a good report showing a significantly improved operating margin. Essity also beat expectations and increased earnings compared with the same period last year thanks to lower costs.
Larger portfolio changes
The biggest change in the portfolio was that the cash position decreased at the end of the month, while the holdings in Assa Abloy, SOBI and Autoliv increased.
Returns as of 2023.10.31
- -2.5%
- -5.4%
- 4.2%
- 0.5%
Monthly report
Simplicity Småbolag Sverige
Development
The fund performed strongly relative to the index and fell only 1.1% while the index declined with 3.5%. In addition to strong quarterly reporting from the fund’s second largest holding AAK, the fund had several holdings that soared following reports. Lifco, also one of the fund’s largest holdings, reported better figures than expected. The company’s sales increased through acquisitions and the group has the financial muscles for further purchases. VBG Group also opened up for continued acquisitions to complement the company’s organic growth of 25%. The stock rose 21% during the month.
Larger portfolio changes
The weight increased in healthcare companies and real estate companies through increased holdings in SOBI and Castellum, respectively. The fund’s cash position decreased.
Returns as of 2023.10.31
- -1.1%
- -8.1%
- -6.6%
- -9.8%
Monthly report
Simplicity Småbolag Global
Development
The fund followed the market lower during the month. The companies generally found it difficult to get positive reactions to their reports, but there were exceptions. Comfort Systems USA, an installer of HVAC systems, beat expectations and raised its dividend, which was rewarded with a 9% gain for the stock during the month. The fund’s Asian companies performed positively, including grocery retailer Sheng Siong Group, whose report was as stable as always.
Larger portfolio changes
WNS Holdings, an Indian outsourcing company, released a report during the month that was disliked by analysts, the market and us, and we left the holding completely in October. We continued to add to the position in Frontdoor.
Returns as of 2023.10.31
- -6.1%
- -8.6%
- -1.4%
- 1.0%
Monthly report
Simplicity Fastigheter
Development
Real estate companies generally released good reports in line with expectations during the month. Although declining property values weigh on the bottom line, the basic business is stable. Balder, for example, increased its net operating income by 16% and rental income increased by 13.5% compared with the previous year. Corem continued to strengthen its balance sheet through property sales and loan repayments, which was appreciated by the market.
Larger portfolio changes
The portfolio was stable during the month with the biggest change being an increased weight in Kojamo to 2.4%.
Returns as of 2023.10.31
- -4.7%
- -12.9%
- -11.1%
- -19.7%
Monthly report
Simplicity Green Impact
Development
The fund fell with the global stock markets. Renewable energy companies declined with rising interest rates and falling energy prices, and many reporting companies struggled to live up to expectations. However, the fund’s holdings in digitalisation developed positively. The fund’s largest holding, Microsoft, continues to grow in cloud services and rose on the report, as did Dassault Systems, which also beat expectations. The fund’s best holding, however, was Nomura Micro Science, a producer of water purification solutions, which rallied on a reverse profit warning with a near doubling of its operating profit forecast.
Larger portfolio changes
Positions in companies within energy-efficient technology expanded through the acquisition of Carrier Global, Digital Realty Trust and Owens Corning. The weight of companies in electrification decreased slightly, partly through the sale of Vitesco Technologies, which soared following a takeover bid during the month.
Returns as of 2023.10.31
- -4.9%
- -12.0%
- -3.0%
- 3.1%
Monthly report
Our Equity Funds
Simplicity
Fastigheter
Simplicity Fastigheter invests in listed companies that own, manage, and build various types of real estate in the Nordic region.
Simplicity
Palma
Our first actively managed mixed fund aims to achieve as high a risk-adjusted return as possible.
Simplicity
Green Impact
A global equity fund investing in companies that contribute to a sustainable development. The fund is classified as dark green (Article 9) under the EU Sustainable Finance Disclosure Regulation (SFDR).
Simplicity
Sverige
After several successful years managing Simplicity Norden we launched Simplicity Sverige, which only invests in stocks listed on the Stockholm Stock Exchange.
Simplicity
Småbolag Sverige
Simplicity Småbolag Sverige focuses on Swedish small-cap stocks. An investment fund for those who believe in the power of Swedish innovation and entrepreneurial spirit, which is anything but “Lagom”.
Simplicity
Norden
Simplicity Norden was launched in 2002 when Simplicity was founded. It has since then outperformed its benchmark index and was awarded with the prize as the best nordic equity fund at the Morningstar Fund Awards 2019.
Simplicity
Småbolag Global
Global diversification and higher expected returns for small- to mid cap equities. Simplicity Småbolag Global is our offering to investors seeking investments in small- to mid cap companies globally.