Stockholm (HedgeNordic) The Norwegian managed fixed income fund Storm Bond Fund, with an overriding focus on Nordic bond markets, delivered a return of 3.3% in January, continuing its strong end-of-2016 performance.
The fund, which has 577 million NOK in AuM, finds itself in a flexible and robust situation with regards to rising interest rates and inflation, says Storm Bond Fund’s CIO Morten E. Astrup. The fund’s interest rate duration now stands at only 1.1 years and its yield to maturity is 9.9%. The fund’s January returns consisted of a 50% hike in its position in Polarcus bonds, which aggregated to 1% on the portfolio level, and its positions in DOF Subsea and Stena also improved.
The fund decided to profit following its strong performance in December and potentially rising interest rates to sell its Ensco 2044 fixed rate bonds, which decreased credit and interest rate duration as well as volatility in the fund, given the long duration of the bond. It also sold -50% of its shares in Polarcus as part of its strategy to gradually reduce the fund’s total equity exposure and reduce volatility.
Going forward, Storm Bond Fund considers U.S. President Trump to pose a binary risk, seeing high yield bonds with limited interest rate risk as favourable.
Commented Marcus Mohr, Sales Manager with Storm Bond Fund: “It is good to see that our management team’s disciplined investment process, with strong focus on fundamental research and relative pricing, continues to deliver good risk-adjusted returns to our clients. With the positive momentum seen YTD in the Nordic High Yield primary market, we are optimistic about 2017.”
The fund’s objective is to deliver a 10-12% annual return, a target it vastly surpassed in 2016 with a return of 17.62% for the year.
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