Newsletter Equity Funds 31/5
Market development
- Surprisingly strong GDP growth in Sweden in the first quarter, +0.6% QoQ.
- There were concerns about the US debt ceiling, which was resolved at the end of the month.
- Central banks such as the Fed and the ECB continued to raise interest rates, but the Fed gave softer information about the future. Monetary policy was in line with expectations and received slightly less attention than before.
- The AI boom crystallized with sharply raised forecasts from hardware manufacturers Nvidia and Marvell Technologies. Companies that benefit from AI in different ways rose.
- Weak macro data was noted in China, where industrial production, retail sales and the PMI came in below expectations in May.
Simplicity Norden
Development
Several of the fund’s industrial companies continued to perform positively, driven by a resilient economy and AI. The best holding during the month was ABB, which rose after positive comments from analysts who see continued strong demand in electrification and automation. Atlas Copco also had a good month as the company is expected to benefit from the AI development as the company’s vacuum solutions are used in the production of semiconductor components. Trelleborg also received a boost after it presented higher financial targets.
Larger portfolio changes
The raw material companies were decreased as the weight was reduced in Boliden and UPM-Kymmene was divested.
Returns as of 2023.05.31
- -0,8%
- -1,1%
- 3,0%
- 3,8%
Monthly report
Simplicity Sverige
Development
The fund’s best holding during the month was ABB, which rose after positive comments from analysts who see continued strong demand in electrification and automation. The share is also an example of companies that are believed to benefit from AI development, which received increased focus during the month. Atlas Copco also rose on the same theme as the company’s vacuum solutions are used in the production of semiconductor components. Munters continued its bull run after new raised target prices for the company, which are also expected to benefit from AI development as the company’s climate systems are used in data centers and in the manufacture of electronics.
Larger portfolio changes
Industrial companies increased broadly, including purchases of Volvo, Atlas Copco, ABB, Sandvik and Beijer Ref. Boliden and Loomis were both decreased by just over one percentage point.
Returns as of 2023.05.31
- -2,4%
- -2,0%
- 1,1%
- 5,8%
Monthly report
Simplicity Småbolag Sverige
Development
The fund’s best holding was Munters which continued to rally after several raised target prices for the company, which is also expected to benefit from AI development as the company’s climate systems are used in data centers and in the manufacture of electronics. Mycronic rose double digits and received new orders from existing customers in Asia during the month. Trelleborg also contributed positively as the company’s increased financial targets lifted the share.
Larger portfolio changes
Industrial companies were increased, mainly through purchases of Beijer Ref and Addtech. The weight in SOBI decreased sharply to 1.5%.
Returns as of 2023.05.31
- -3,0%
- -3,6%
- -7,3%
- 2,9%
Monthly report
Simplicity Småbolag Global
Development
The fund also benefited from higher valuations for AI-related companies. Belden, which manufactures network equipment for data centers and industrial automation, rose sharply, as did semiconductor manufacturers Fabrinet, Vishay Intertechnology, CTS Corp and Diodes. However, the month’s largest contributor was Stella-Jones, a manufacturer of wooden building components. The company crushed the expectations for the first quarter of the year and raised its forecast for the year to the tune of higher target prices from analysts. The holding rose by double digits.
Larger portfolio changes
The weight in US banks continued to decrease during the month, as did transport companies. Two American home builders were brought into the portfolio: Meritage Homes and Taylor Morrison Home.
Returns as of 2023.05.31
- 3,0%
- -3,2%
- 6,0%
- 3,6%
Monthly report
Simplicity Fastigheter
Development
The downgrade of SBB‘s credit rating triggered a collapse in the stock and dragged the entire real estate sector into the fall. As a natural consequence, the fund performed weakly during the month. The market generally remains sceptical to the companies’ high borrowing.
Larger portfolio changes
The weight increased in Castellum, which is now the fund’s second largest holding after Sagax. The weight in SBB was cut to 1.4%.
Returns as of 2023.05.31
- -15,5%
- -22,5%
- -36,3%
- -19,8%
Monthly report
Simplicity Green Impact
Development
The year’s strong development continued during the month. Several holdings linked to AI development rallied, including Nvidia, which is now the fund’s largest holding. The company’s processors are particularly suitable for generative AI, such as ChatGPT. Several other holdings, such as ASM International, Flex and ON Semiconductor, rose on the same theme. Swedish Munters also rallied after several raised target prices for the company, which is also expected to benefit from AI development as the company’s climate systems are used in data centers and in the manufacture of electronics.
Larger portfolio changes
Producers of technical hardware increased by approximately 5 percentage points, partly due to price increases in several previous holdings, and partly due to the purchase of Halma PLC.
Returns as of 2023.05.31
- 4,8%
- 3,8%
- 4,7%
- 10,3%
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.