June was a good month for the fund. The return was mainly driven by good further spreading of the credit spread. With historically low credit spreads, capital discipline is essential. Capital discipline ensures that we are paid relatively well for the credit risk we take on. Activity in the issue market has been at a high level, with new transactions well into June, which is unusual in historical terms. This has led to a calmer secondary market.
On 19. On 19 June, Norges Bank announced a cut in the key interest rate to 4.25 per cent, which surprised the markets. The announcement also stated that if the economy develops roughly in line with Norges Bank's expectations, there will be further interest rate cuts during the year. The market is now pricing in an interest rate just below 4 per cent in the fourth quarter.
The month was characterised by significant geopolitical turmoil, an ongoing trade war and uncertainty related to tariffs. Despite this systematic risk, the portfolio has held up well. The fund's overexposure to property, banking, finance and insurance has been profitable, as these sectors have been less affected by external turmoil.
In June, we completely divested from Contships Logistics and Lime Petroleum. We acquired CPI, DNO and Bluenord.
We will continue to exercise capital discipline and focus on selecting what we consider to be the best risk-adjusted investment opportunities. The portfolio is solid and liquid, well positioned to deliver strong risk-adjusted returns going forward.
At the end of the month, the fund had a current interest rate of 8.00 %* and an effective interest rate of 10.83 %.*
*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
