Kraft Høyrente has delivered another good year, despite a more unpredictable market, characterised by geopolitical uncertainty and a normalised yield curve. The fund's biggest contributors during the year were property, banking, finance and insurance.
The Norwegian high-yield market remained robust right up to the end of the year, but with declining issuance activity. The general trend is continued pressure on credit spreads, although some individual names in the market have increased their credit spreads. This is largely driven by strong liquidity in the market, both from national players and international investors who find the market attractive on a relative basis. In addition, several technical factors are contributing to this compression, such as high effective interest rates and a shrinking NOK universe of bonds.
December was a quiet month for the fund, with minor adjustments to existing positions such as Citycon and Heimstaden. The fund did not participate in any new issues.
We believe 2026 could be another good year, driven by strong technicals, but with a greater focus on fundamental differences between companies rather than sector allocation. Effective interest rates in the markets are still attractive, but investment decisions will be characterised by credit-specific assessments and relative pricing. In such a market, management skills will be rewarded rather than returns being boosted by a strong market.
For Kraft Høyrente, the key words will continue to be to protect the downside, maintain liquidity and price risk correctly.
At the end of the month, the fund had a current interest rate of 7.60 %* and an effective interest rate of 9.71 %.*
*FExcess costs related to management. May change from day to day and is therefore no guarantee of the return in the period for which it is calculated.
Sincerely yours,
Øivind Thorstensen & Simen Aarsland Øgreid
