EN 
SE 
NAV rate for May was 102.08, an increase of 0.02 (0.02%). A weak month that we are not happy with.
We have a greater involvement in Denmark through a bond with a few investors since 2018 which has worked well until now. The company has been in negotiations to be acquired since the beginning of 2020 and these have unfortunately now ended without a deal coming to fruition. Furthermore, the company has had a weak development recently with falling revenues. This is due to tougher competition, the business model with partnerships has worked poorly during the corona and that management has also made some decisions that cost a lot. Together with the other bond investors, we have given the company the task of coming up with a credible solution for how the company will move forward. However, the fund has chosen to make a larger reservation to highlight the seriousness of the situation. We will do everything to secure the value of the exposure and ask to hear back about how development is going.
We have inflows of approximately SEK 53 million, thank you for that.
New lending in May was approximately SEK 42 million.
The fund still has some liquidity left since last month and this also has a negative effect on the results for May.
We continue our work with extra frequent follow-up of our companies with regard to the Corona situation.
Finserve Nordic, which is the fund's AIF manager, has in 2020 joined the company to the PRI network, Principles for Responsible investment. The network is independent but supported by the UN and encourages investors to invest responsibly by following the principles developed by the network.
Finserve Nordic believes that the integration of sustainability risks is an important part of the funds' investment processes. Sustainability risks are defined as environmental, social or corporate governance-related circumstances that could have a significant negative impact on the value of investments.
Social aspects include e.g. human rights, labor rights and equal treatment. Environmental aspects are e.g. the companies' impact on the environment and climate. Corporate governance aspects are e.g. anti-corruption, shareholders' rights and business ethics
All funds under Finserve's management follow the responsible investment process formalized in Finserve's Sustainability Risk Integration Policy. The policy is available on the company's website https://finserve.se/viktig-information/. Each fund's sustainability policy is available on the funds' websites.
We can announce that based on today's sustainability requirements for funds, Scandinavian Credit Fund I is to be considered a "light green" fund, which is very good. In Sweden, about 30% of all funds have a rating corresponding to light green or better.
The market
It has been a bit shaky on the stock markets this month, and there are probably many explanations for that. The most important ones, as I see it, are the market's concern about inflation, future bond interest rates, partly the level of repo rates and highly valued stock markets. Inflation statistics both here at home and in the US came in clearly above expectations in May and this has given the markets a headache. We had a sharp rise in interest rates on the US 10-year bond that started in September 2020. It was effectively a doubling of the interest rate with a sharp fall in price as a result. The bond market is a good leading indicator regarding inflation expectations and it is a tip to follow these. The central banks have taken a wait-and-see approach to the new inflation statistics and are generally communicated as temporary. The future will tell.
You can see a clear illustration of how inflated share prices are in the picture below, which shows the dividend yield on a broad European share index and the S&P 500 minus the ten-year interest rate in the respective country/area. As you can see, the difference has not been this much since the early 2000s with the exception of the time before the financial crisis and we know what happened after that.
I don't want to sound like a doomsday prophet. However, it may be appropriate to, as always, review your portfolio to see what risk you have and whether it rhymes with your risk appetite.
In the picture below, you can see what the interest rate markets have priced in in terms of interest rate increases in the next few years. In Sweden approx. 50 interest points. One thing that could be a trigger for continued concern is if this changes into increases in repo rate hikes. As you know, it is not the actual picture today that governs but what the market's expectations are and they can change quickly.
Does inflation have to be bad for SME companies? No, not if it is under control, it is usually a sign that growth in the economy is going well. Furthermore, the earnings of these companies increase under these conditions and it is thus easier for them to manage their debt obligations.