Global Security Fund månadsrapport – mars 2023

Global Security Fund Monthly Report – March 2023

March was a strong month for technology, which clearly favored the fund's cybersecurity exposure. Among holdings that performed well were Microsoft, Intel and Crowdstrike. The defense sector performed somewhat negatively as a sector, but some of the fund's holdings such as SAAB excelled and have had exceptional performance in 2022. The SAAB share has really outperformed as the US defense sector has not had the same performance for the year at all, which also affects the fund's return.

March was a troubled month where the risk indicator VIX rose to its highest level since October 2022. It was mainly banking unrest linked to the American bank Silicon Valley Bank getting into trouble together with the systemically important problem bank Credit Suisse. Decisive action above all in Switzerland, but to some extent also in the USA, caused the risks and concerns to subside somewhat at the end of March.

It is difficult to forecast the risk of recession and how fragile financial stability is. The latter perhaps mainly because we see consequential problems from the artificially low and negative interest rates together with QE. We are now seeing ongoing problems as a result of this, and new problems are likely to appear in the future.

On top of this, we have geopolitical risk, which the fund judges to be higher than in decades. We consider geopolitical risk to affect global trade and, as a result, the economy. In that climate, it would seem natural to have an allocation towards a fund that is positively exposed to geopolitical risk.

On the geopolitical scene, it is becoming increasingly obvious that the conflict in Ukraine is broader and more complex than anyone could have imagined, and as a result it affects the conditions for peace and geopolitical balance. China's position is becoming increasingly clear and even if they want to get a solution to the crisis in Ukraine to disrupt the country's exports and trade, together with strategic partners and key countries they want to end American hegemony and also the opportunistic expansion of the United States and NATO. Today we see increasingly strong ties between China, Russia, Iran and where they are also trying to ally with more geopolitical key actors such as Saudi Arabia. It has also been confirmed that the balloons shot down over the US have been confirmed to be able to gather information, which was likely the purpose. This type of craft is not new and the US has used similar ones, but the fact that both China and the US are operating in a gray area indicates an escalation and defines an incipient escalating cold war.

The development is clearly worrying and places greater demands on cooperation within NATO and the US with allies, as well as European cooperation and a united voice becoming increasingly important. We will see the results of this type of collaboration in the near future. The development is also extremely negative for the climate issue and raises the question of whether we can reach the global goals at their peak or whether regional/continental goals are required.

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