Monthly newsletter September 2019

September was once again a good month for the Global Security Fund with a return of 1.0 percent. Since its inception, the fund has recorded an increase of almost 15 percent, which is better than its benchmark index and more than double the Swedish OMX index. At the same time, the fund has shown a lower risk, measured as annual standard deviation, compared to both benchmarks and Swedish shares.

The best performing company of the month was Hewlett Packard (HPE) with an increase of almost 10 percent. In September, HPE completed the purchase of Cray. Cray's goal is to build the most powerful computer in the world. The company has succeeded well and today counts the US government as its biggest customer. The integration of Cray into HPE will enhance the future offering of storage, software and services in high-performance computing and AI products. HPE announced in August that a collaboration with NASA had begun to build a new supercomputer. The computer will be used by the Ames Research Center to develop models and simulations of landing processes. According to a report by Grand View Research, the 'high-performance computing' market is expected to grow by 7.2 percent per year between 2018 and 2025, reaching close to $60 billion by 2025.

A lot is happening in high-performance computing. In September, Google announced that their researchers, using a quantum computer, managed to complete a calculation in just over three minutes, which would take 10,000 years for the most powerful computer. Although no one today knows exactly what such breakthroughs will entail, we can state that technological development continues at an ever-increasing pace. Companies in the security sector that are at the technological forefront will have enormous opportunities going forward.

Norway's Kongsberg Gruppen (KOG) had a fantastic month and was up 9.4 percent. KOG has won many contracts recently, including a strategically important procurement with NASA and Space Norway. Other companies that performed well during September were Textron and Flir – up 8.8 percent and 6.7 percent. The market is also starting to appreciate the previously announced merger between Raytheon and United Technologies, which resulted in nice gains for the companies of 6.1 and 4.8 percent, respectively. Boeing had another strong month and was up about five percent.

Holdings with worse performance during the month were Booz Allen, Airbus, Viasat, General Dynamics and Leidos. We believe in the companies in the long term and have therefore taken advantage of the downturn and increased our holdings in General Dynamics and Viasat.