"This is a very pleasant milestone for Kraft Høyrente. We are of course very pleased that the fund has now passed NOK 1 billion in total assets, but we are even more pleased with the return the fund has delivered. The good return is a confirmation that the customers of Kraft Finans and Kraft Fondene have made a good investment," says CEO Sveinung Byberg.
Since inception in August 2019, the high-yield fund has delivered more than 12 per cent return to unitholders, making the fund one of the best Norwegian high-yield funds in terms of return.
Solid returns in 2020
2020 was a challenging year for most people, and Kraft Høyrente also experienced major fluctuations when the first corona wave hit the country. However, the fund manoeuvred well in the uncertain waters and quickly recovered. The return for 2020 ended at a solid 6.91 per cent.
- Being able to turn your portfolio around efficiently if something unforeseen happens is extremely important. We were very successful with this during the corona crisis. We now have an even more solid portfolio, which bodes well for the years to come," says Øivind Thorstensen, manager of Kraft Høyrente.
Although the corona crisis is still creating some uncertainty, he is optimistic about the future. The fund's investment strategy is to buy quality companies with a good capital structure, stable earnings and a reasonable debt ratio with good liquidity in the securities.
- The most important thing is that the companies pay interest and instalments. "We aim to deliver a 4-6 per cent annual return to our customers. What is important when we guide in this interval is that we don't run after unnecessary risk, but rather can choose quality," says Thorsenten.
Click here to read Finansavisen's review of the 1 billion AUM milestone
Close the fund?
He is prepared to use all the tools in his toolbox to ensure the best possible return for his customers within the fund's mandate.
- We will continue to deliver good results, but in order to succeed with a high degree of active management, we must have as much room for manoeuvre and use all the tools available," says Thorstensen.
If investments in the fund continue at the same level as today, the fund will reach NOK 1.5 billion in 2021. At that point, the fund will probably be closed to new investments.
- In order for us to continue to succeed in delivering good returns, it is important to have room for manoeuvre. We lose this if the fund becomes too large. It's all about the best possible risk-adjusted return for our customers," concludes Thorstensen.
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Good alternative to zero interest rate
With banks offering virtually zero interest rates, more and more investors are looking for alternatives that can give them a good risk-adjusted return over time.
Sveinung Byberg believes that the risk level, liquidity and management philosophy have been key to Kraft Høyrente's success in the market.
- We believed that Kraft Høyrente would fit in well with our other product range, and this has proved to be the case. Customers have been very receptive to the fund. It's nice to be able to offer them a good alternative to high-interest accounts with the banks. Here they get a good interest rate at a relatively low risk," says Byberg.
He emphasises that Kraft Høyrente is particularly popular with companies with surplus liquidity in their bank accounts. For them, there are usually three recurring preferences: security, good returns and liquidity.
- Kraft Høyrente is a good tool for companies that want better earnings on their surplus liquidity. This is money that is not normally needed for day-to-day operations. This money loses value if it remains in a high-interest account," says Byberg.
