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Finserve Global Security Fund recorded its first month of 2024 with negative returns, -1.15 % for April. That after a first quarter where the fund was up 21.4 %.
During April, we have seen European defense companies marked by higher volatility and where valuations have been called into question. In the wake of these was Goldman Sachs' report that European defense companies were valued around all time highs and that further upside was limited. The report caused European defense companies to fall initially. The managers believe that it would be very strange if the valuations were not around an all-time high given the state of the world and the massive structural growth we are seeing. There is an ongoing price increase in line with the strong growth. Valuation multiples become high in such a phase and with growth and the current consensus estimate they fall continuously. We see the same phase in the chip and semiconductor industry.
SAAB was the company most affected by the sector's decline in April, and there are signs of concern about sufficient margins. SAAB and several companies are clear that they want to see predictable growth in order to be able to make sufficient investments and secure Europe's defense industry and security needs. It is in the interest of all of Europe to have a robust defense industry with companies that have the conditions to make investments and scale up production. It will benefit the sector's growth and profit growth and when it happens structurally and over a long period of time so it is relatively unique and also very favorable for investors. Defense companies recovered during the month and Norway's Kongsberg group was up 5.6 % for the month. One sector that the fund has gradually increased in is Intelligence. Key companies in that sector are Caci International and Leidos, both up around 7 % during the month.
At the same time, we have received positive news about American aid packages, which are said to be followed by more European ones.
The US interest rate announcement and associated press conference conveyed that in the US we can expect higher for longer and that interest rate cuts will be fewer and moved forward. The American economy continues to be strong and this may have the effect that we get a different interest rate trend in Europe compared to the USA.
The great demand for the fund and the sector as a whole has been made clear by the fact that the fund has grown by over 100 % in AuM in a short time.
Finserve Global Security Fund I is Europe's first defense and cyber security investment fund for private capital. It is also the first defense fund to receive an Article-8 classification.
Defense met Finance at Berns Salonger
Finserve Global Security Fund arranged Defense meets Finance at Berns during Spartorgsdagen in collaboration with Defense Sector News. In addition to great interest and good turnout, there is now a great appetite for more events.
We plan to hold one at the end of August or beginning of September, so register your interest already now for the upcoming arrangement and what you are most interested in hearing about.