- Today, private individuals and companies barely get any interest on the money they have in their accounts. By investing your money in a high-yield fund, there is a high probability that you will get a significantly better interest rate than at the bank," says Stian Pedersen.
Pedersen is Head of Investments at Kraft Finans, and over the past year the company has experienced an explosive growth in customers wanting to move capital away from traditional bank savings and into high-yield funds. Both private individuals and business leaders are fed up with the poor returns they have received on their own or their company's surplus liquidity.
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Today's interest rates are historically low, and the largest banks currently offer corporate accounts with 0.0 per cent interest. In addition, various capital accounts are offered, but here too interest rates are very low. Adjusted for inflation, money loses value every single year it remains in such accounts.
In 2020 alone, Kraft Finans' customers invested NOK 400 million in the high-interest fund Kraft Høyrente, which is the company's own high-interest fund. Kraft Finans' customers are mainly private individuals or business owners with surplus liquidity. This money is usually invested in equity funds, property and high-yield funds.
- "Investing in a high-yield fund is a very good way of diversifying the rest of your investment portfolio. Our high-yield fund is a good alternative for individuals or companies that want better earnings on surplus liquidity," says Pedersen.
This is money that isn't normally needed for day-to-day operations, so it's silly for it to sit in a bank account and wither away.
- Kraft Høyrente is also a popular choice for customers who don't want to be exposed to the risks associated with the stock market," Pedersen adds.
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Maaseide's commitment to finance
Kraft Finans is one of Bjørn Maaseide's major financial ventures, and he currently owns 45 per cent of the company, which is mainly involved in wealth management. In recent years, the company has been successful in managing the surplus liquidity of individuals, families and companies. Today, the company has around 2,000 customers across the country.
Kraft Finans also has its own asset management department, and through Kraft Fondene the company also offers investments in equity and fixed income funds.
Maaseide himself has chosen to invest a significant portion of his own surplus liquidity in Kraft Høyrente.
- I am very pleased with the development of Kraft Høyrente. Placing capital in a high-yield fund is a sensible investment of liquid assets. This contributes to good diversification in the portfolio," says Maaseide.
Bjørn Maaseide has chosen to invest in Kraft Høyrente. The investor is currently a board member of Kraft Finans and the largest owner of the company.
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Security, good returns and liquidity
Kraft Høyrente is managed by Øivind Thorstensen. He often takes part in meetings with private individuals or companies that have surplus liquidity in their bank accounts.
There are usually three recurring wishes in these meetings: security, good returns and liquidity.
Thorstensen therefore aims to have a portfolio that best represents a cross-section of the Norwegian core economy.
- We only invest in companies that have a proven business model, good cash flow and a healthy debt situation," says Thorstensen.
Øivind Thorstensen is manager of Kraft Høyrente
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Approaching NOK 1 billion
He started managing Kraft Høyrente in August 2019. Since its inception, the high-yield fund has delivered a return of 11.12 per cent*, and in terms of return, the fund has been one of Norway's best. In 2020, the fund's return was 6.91 per cent.
- "In just 18 months, NOK 960 million has been invested in the fund. "The investments mainly come from private individuals and companies who want a better return than what is available in banks, at a relatively low risk," says Thorstensen.
He attributes the fund's success to the level of activity he puts into its management.
- Put simply, it's about being active and true to the mandate. We have risk limits in the mandate that put a floor on the risk scale, but regardless of that, we are very keen to invest in the best companies available at any given time. The main task is to focus on quality companies with low credit risk, so that we always secure the investment and the return for our customers. We have remained true to this strategy since our inception, and it has so far been a key success factor. We have used 2020 to further diversify our portfolio and made several good portfolio adjustments. We are therefore well positioned to deliver reasonable risk and return in the years to come.
- What returns can customers expect in the years to come?
- We aim to deliver an annual return of between 4 and 6 per cent. The background to this target is that Kraft Høyrente has invested in companies with good credit risk.
These companies have manoeuvred well through the corona pandemic, and most have delivered better results than expected.
- We expect these companies to continue to deliver well. The credit duration is around three to four years, with an effective interest rate of 6.25 per cent. Customers will probably be able to enjoy this over the next few years," concludes Thorstensen.
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All forms of investment involve a degree of risk. Kraft Finans emphasises that investments in Kraft Høyrente will always involve uncertainty about the future return. The change in value may be large, small, non-existent or negative and in certain extreme cases virtually worthless. Historical returns are no guarantee of future returns. The return depends, among other things, on general developments in the securities market, the fund's risk profile, costs in the fund and the manager's general success in selecting shares in the portfolio. The management of Kraft Høyrente will be carried out to the best of our judgement and the information in this document is designed accordingly, but must not be understood to provide any form of guarantee or promise of future returns. This material is marketing information which has been prepared by Kraft Finans AS. Carne Group (publ) has not independently verified any information contained herein and makes no representation or warranty as to the accuracy, completeness, or reliability of such information.
