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Nordic Factoring Fund LUX reports an increase of 0.59 percentage points compared to the previous month. The year-to-date return stands at 5.45 % after fees, with a volatility of 0.3 %, giving an annualized Sharpe ratio of 12.43.
Investments in Finserve Nordic Factoring Fund LUX give investors access to a well-diversified portfolio with over 1,000 counterparties with high credit ratings and an asset class that shows low correlation with other asset classes, such as interest rates, equities, traditional credit, currencies and commodities.
The portfolio consists of approximately 150,000 invoices issued by over 1,000 companies, with an average invoice amount of EUR 2,500.
During October, the risk level in the credit portfolio remained unchanged. The strategy has consistently achieved its target returns and shown low volatility since inception, with no negative monthly results.
No new investments were made during the period, but fund management believes that the current portfolio composition is well positioned to meet market developments in the coming quarter and beyond.
We continue to see good opportunities for attractive risk-adjusted returns with low volatility. The counterparties in the portfolio have an average credit rating of A, and the entire portfolio is protected by credit insurance, which provides strong protection against bankruptcy. The low insurance premium reflects the composition of the portfolio, which the insurance company considers satisfactory and a sign of the quality of the processes and counterparties.
Forecasts
With the Riksbank's low inflation figures, the likelihood of future interest rate cuts increases, which strengthens the fund's long-term competitiveness and makes it more attractive compared to other low-risk investments that are likely to yield lower returns in a low-interest-rate environment.
Two major events marked October: the American election and the Riksbank's interest rate announcement. As expected, Trump won the election, and the new administration can indirectly affect Swedish interest rates and inflation. The new US policy measures could lead to increased public consumption and higher inflation, potentially prompting the Federal Reserve to pause or raise interest rates to counter inflation. This, in turn, can put pressure on long-term interest rates in other countries, including Sweden. At the same time, Trump has promised tax cuts that would stimulate the economy but increase debt.
The Riksbank chose to lower the interest rate by 0.50 %, which was expected. Past and current forecasts indicate further cuts, although there is a risk of change depending on how US monetary policy affects the market.
The fund's current strategy and portfolio positioning are prepared for a scenario of potential market uncertainty and widening credit spreads. By maintaining a diversified portfolio and selecting counterparties with strong balance sheets, the fund is well equipped to handle market stress.
IFRS 9
The reserves in the portfolio are very low. 100 % of the fund's exposure falls within category 1, and the collateral is based on over 30,000 invoices pledged in favor of the fund. The invoices are rolled with payment terms of 30 to 90 days and are credit insured, both with and without recourse.