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Nordic Factoring Fund AB (publ) reports a NAV rate for November of 105.40, an increase of 0.42 percentage points compared to the previous month. The return for the year amounts to 5.40 % after fees at a volatility of 0.3% which leads to an annual Sharpe ratio of 12.43.
Investing in the Finserve Nordic Factoring Fund gives investors access to a well-diversified portfolio of over 1,000 credit counterparties with high credit ratings and an asset class that exhibits 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 to more than 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 been in line with the target return and has shown low volatility since inception, with no negative monthly returns.
No new investments have been made during the period, but management assesses that the current portfolio composition is well positioned for future market developments during the current quarter and beyond.
We assess that there are still good prospects for an attractive risk-adjusted return with low volatility. The underlying counterparties in the portfolio have an average credit rating of A, and the entire portfolio is credit insured, protecting investors against losses in the event of bankruptcies. The low insurance premium shows that the portfolio composition is considered satisfactory by the insurance company and reflects the quality of the underlying processes and counterparties.
Forecasts
The US economy is in an uncertain but dynamic stage. A strong dollar has boosted purchasing power internationally and equity markets have shown robust performance, driven in part by positive growth expectations and increased investment following the recent presidential election. At the same time, uncertainty is high around political initiatives, such as tariffs and other protectionist measures, which risk creating bottlenecks in trade flows and contributing to a more volatile inflation trend. Inflation is a particular concern, as rising too quickly could push the Federal Reserve to keep interest rates higher for longer than the market expects, which in turn could dampen growth.
In Europe, mainly Germany and France, economic development is weak. Industrial production and exports continue to suffer from global uncertainty, and the ECB faces difficult choices. Further interest rate cuts to stimulate the economy are seen as a necessity, but the risk is that these measures will drive inflation, especially if energy prices or other basic goods rise rapidly. In addition, geopolitical uncertainty, including how US trade policy may affect EU export markets, weighs heavily on the outlook. The combination of low growth and weak consumer and business confidence makes the recovery uncertain in the short term.
The Swedish economy has an increased risk of a deepening recession, although the market expects some stabilization and recovery in 2025. Core inflation rose in November, but is still below the Riksbank's target of 2 %. This means that continued monetary policy stimulus in the form of interest rate cuts will likely be required to boost domestic demand. In the longer term, however, lower interest rates can reduce households' incentive to save and contribute to higher consumption, which can become an important driving force for the recovery. GDP increased more than expected in the third quarter, but remained at low levels. The assessment right now is that the Riksbank will lower the interest rate by 25 points on 19 December.
The fund's current strategy and portfolio positioning are prepared for a scenario of potential market uncertainty and rising credit spreads. By maintaining a diversified portfolio and choosing counterparties with high credit ratings and strong balance sheets, the fund is well equipped to handle market stress.