THE FUND
The fund rose 3.7% in February, compared to the fund´s benchmark MSCI FMxGCC Net TR (SEK), which rose 2.8%. Positive relative contributions accrued from the fund’s positions in Egypt and the underweight in Argentina. The fund’s underweight in Vietnam (mainly lack of positions in the largest blue-chips) and the lack of positions in Romania, lowered the excess return to a moderate extent. During the month, we did some rearrangements in the Vietnam portfolio. The Vietnamese consumer conglomerate Masan Group is once again part of the portfolio now that the stock, in our eyes, has come down to attractive levels. The purchase was financed through the sale of the tire manufacturer DRC, the infrastructure company Ho Chi Minh Infrastructure, and Vietnam Electric, which is a subcontractor to the power industry.
MARKET
MSCI FMxGCC Net TR (SEK) rose 2.8% during the month, compared to MSCI EM Net TR (SEK), which rose 2.4%. The primary positive contributions accrued from the rise of Vietnam and Romania, both rising about 12% during the month. Negative contribution was mainly caused by Argentina (-9%), which fell back after a strong performance in January. So far, we interpret the better market for the asset class in 2019 mainly as a reaction and attempt to form a bottom range after the very weak 2018. We are still seeing a rise in relatively low volumes, where foreign investors are still cautious and worried about renewed concerns similar to the ones we saw in the fall of 2018. Based on our discussions with investors, we note that these are generally aware of the historically low valuations across most of our markets, but that global concerns remain an obstacle for further allocations. This constitutes an interesting situation where increased volatility globally can generate a new wave of selling, but where the absence of global shocks in the next few months could lead to inflows to the asset class. All in all, the low valuations, and the fact that we should have seen the worst of the devaluation-wave in 2018, the risk on the upside appears greater than vice versa.
DISCLAIMER: Capital invested in a fund may either increase or decrease in value and it is not certain that you will be able to recover all of your investment. Historical return is no guarantee of future return. The Full Prospectus, KIID etc. are available on our homepage. You can also contact us to receive the documents free of charge. Please contact us if you require any further information: +46 8-5511 4570.
