November: SCFI steg med 0,5 procent – ”mycket bra månad under rådande omständigheter”

November: SCFI up 0.5 percent – “very good month in the circumstances”

The NAV rate for November was 103.85, an increase on the month of 0.52 (0.50 %) and a standard deviation of 0.92. Under current corona circumstances a very good month. We have inflows in November of SEK 26 million, many thanks for that. New lending in September was approximately SEK 18 million.


We remain well in line with the revised 2020 yield of 3-5 percent after fees.


Our work with extra follow-up of our borrowers, which is driven by the second wave of covid-19, is going well. We have not had to make any concessions that affect the portfolio to any great extent. There are marginal adjustments to IFRS this month. In a few isolated cases, we will temporarily capitalize interest payments. This does not mean that the company is bad or that the credit has deteriorated, but is completely in line with the recommendations that ESMA has given for everyone who follows IFRS 9. I want to emphasize that our exposure to hospitality, transport, tourism etc. is zero.


We expect to liquidate/restructure some smaller credits that were in category 3 during the month. This means that they are removed from category 3 or out of the portfolio, or alternatively given to another borrower. The result is good for the portfolio.


Below you see the graph of SCF I since the start, we are very proud of the really boring graph shown. Boring is good in this context, we don't want a messy and jumpy curve.


Source Bloomberg


The graph below shows all months in the fund since inception, we only have two negative months since January 2016, very good.


The market:


During November we experienced one of the best single months for risky assets in modern times, congratulations to everyone who was overweight stocks in eg Spain, UK etc.


We have received:


  • New President of the United States Joe Biden wins convincingly, the market (and I) like it. This hopefully means that the US will once again become a stabilizing factor in the world instead of only thinking about its voters in the Midwest. I further hope that the rhetoric will return to something that does not resemble the level of a snarky child with sand in his eyes, but becomes statesmanlike and respectful of everyone's opinions.
  • The market also likes the Democrats not winning the Senate so they can pursue policies that are stifling to growth.
  • Vaccine is underway and vaccinations will start in the UK next week.
  • Central banks continue to emphasize ultra-easy monetary policy and that it will last for years to come.


Government bond interest rates are around zero and are not an option for those who want a return on their capital.


All this has contributed and will contribute to a positive sentiment in the near term.


In the graph you see Sweden's GDP growth since the year 2000 and with it I want to illustrate that with the right measures the economy will return to growth eventually, it will work out this time as well. The GDP drop was actually greater during the financial crisis, but it was less noticeable because then there were no restrictions on how we should live our lives.

Source Bloomberg


What do potential risks look like going forward?


  • Risky assets have once again run off a little too violently and the real economy with fiscal policy is lagging behind. We see signs that Poland and Hungary are preventing the EU from implementing the huge support package it voted through last summer because they cannot accept the writing that a condition for support is that countries must follow "democratic principles" (just because Trump is gone, the powers of darkness are not gone, we have them up close)
  • Vaccination takes time, there are setbacks to vaccines. I am very worried that in Europe, and especially in Sweden, the preparations for mass vaccination are poorly planned. The government considers the regions to be responsible and vice versa. Ultimately it hits a service sector that is limping precariously let's hope I'm wrong.
  • Inflation will not come this year and maybe not in the next few years. The more I call the wolf, the less likely anyone will listen when it comes.
  • When the asset purchases of long government bonds cease, long-term interest rates will rise dramatically and it will shake up risky assets. It will be a delicate balancing act to walk for central banks around the world.


Below you can see the NAV distribution and main sectors in which the fund is invested: