Nordic Factoring Fund månadsrapport – april 2024

Nordic Factoring Fund monthly report – April 2024

Nordic Factoring Fund AB (publ) reports a NAV rate for April of 102.01, an increase of 0.54 % from the previous month.
The fund's underlying return is in line with expectations and risk level. Expected interest rate cuts will not affect the fund's return or the historically stable risk level. Lower interest rates will also increase the fund's competitiveness, as other low-risk investments are expected to yield lower returns due to future interest rate cuts. The managers have carefully analyzed sectors and individual counterparties to minimize risks and maintain a high repayment capacity and low volatility. The fund's underlying counterparties have an average rating of A and the fund has credit insurance as protection against bankruptcy. The low insurance premium indicates that the composition of the portfolio is satisfactory for the insurance company.
Investing in the Finserve Nordic Factoring Fund gives investors access to a well-diversified portfolio with over 250 counterparties with high credit ratings and an asset class that exhibits low correlation with other asset classes such as interest rates, equities, credit, currencies and commodities.

The US market shows resilient and sluggish inflation, which affects interest rate expectations. Despite continued strong economic figures and low unemployment in April, there is uncertainty about when an interest rate cut in the US can be expected. Europe and Sweden continue to show reduced inflation, and interest rate cuts from the Riksbank and the ECB are expected with great probability at upcoming meetings in May and June, respectively. However, the Riksbank faces challenges with the weakened krona during the first quarter, which may affect the decision-making process regarding interest rate cuts. The market consensus believes in a reduction on May 8, and there are many indications that this will happen. It remains to be seen how quickly the Riksbank will act after the first reduction.
Lower interest rates will facilitate sectors and companies that depend on financing. Factoring is on a strong growth journey as banks and lending institutions become increasingly restrictive with credit. Factoring enables many large and small companies to grow with a more flexible loan option.

The reserves in the portfolio are very low. Almost 100 % of the fund's exposure is in Category 1, and the collateral is based on over 30,000 invoices pledged in favor of the fund. The invoices are rolled over in 30 to 90 days with credit insurance with and without recourse.

Read more