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Pacific Fonder’s Absolute Return Funds Turn Around Performance in May

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Pacific Fonder AB’s two absolute return funds – Pacific Absolute Return and Pacific Precious – finally put an end to a two-month stretch of negative performance, bringing their year-to-date return to 3.91% and 4.02%, respectively. The investment firm’s three mutual funds did not disappoint either, though the Pacific Extraordinary Brands – the fund focusing on the luxury goods sector – posted a negative return of 0.88% for the month of May after enjoying strong returns since the start of the year.

The Swedish investment firm’s absolute return funds, both of which are included in the Nordic Hedge Fund Index (NHX), generated positive returns during the month of May in a relatively calm market. Pacific Absolute Return, which aims to achieve absolute returns through active asset allocation across various asset classes such as equities, fixed income, money market instruments and real estate, posted a monthly return of 0.57%, facilitated by strong gains from sub-sectors Cyber Security and Rechargeable Batteries. According to portfolio manager Eric Strand, the fund’s Real Estate holdings also performed well despite the presence of a clear risk of collapse in certain segments of the market, especially in Canada and Australia, with Sweden also looking quite vulnerable. With the banking systems in Italy and China showing signs of weakness, and the uncertainty created by the new president of the United States, the team behind Pacific’s absolute return funds is looking forward to increasing volatility in equity markets.

Meanwhile, the Pacific Precious fund, which seeks long/short exposure to precious metals (predominantly gold and silver) and companies within the precious metal sector, generated a slightly lower return of 0.30% in May despite experiencing a tough start to the month. Strand and his team believe the price of silver looks attractive at the moment, with the positions of commercial traders fueling enthusiasm.

When it comes to the three mutual funds run by the Stockholm-headquartered investment firm, Pacific Extraordinary Brands, Pacific Fonder’s youngest fund celebrating its one-year anniversary, enjoyed an incredible run this year despite suffering a minor slump in May, delivering an astonishing year-to-date return of 14.05%. Pacific Explorer Dynamic, a fund focusing on emerging markets, has experienced a slightly stronger performance relative to its younger fellow, having returned 18.76% for the first five months of 2017. The fund generated a return of 3.05% in May, extending its stretch of positive performance to five consecutive months. Pacific Fonder’s actively-managed global equity fund, Pacific Global Dynamic, posted a return of 0.70% for the month of May, bringing its year-to-date return to a hefty 9.30%.

The strong performance of these funds has been partly fueled by a steep rise in profits, as U.S. corporate profits rose in excess of 10% during the first quarter. Mattias Gromark, fund manager of the abovementioned mutual funds, says it is surely no coincidence that we observe a jump in profits, as more and more people join the global workforce amid continued modest inflation. Gromark also feels the pessimism surrounding Europe may have come to an end for the time being after Macron’s win in the presidential election in France. Gromark believes Europe may even become stronger after U.K.’s decision to leave the EU, with both parties realizing that there is a common path to follow going forward.

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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