Modelportfolio June 2014

Our modelportfolio fared well in June, outperforming the benchmark with 1.01%. Benchmark returned 0.87% in June while our modelportfolio generated 1.86%. The main contributors to the excess return last month was Fidelity Asian Special Situations, SEB Nordic Focus Fund and BlueBay High Yield, up 5.23%, 2.83% and 1.08% respectively. This leaves our modelportfolio with a return of 3.75% for the first half of 2014.

Changes in the modelportfolio
The weighted contribution between the fixed income and equity part of the portfolio is more or less the same, 48% and 52% respectively. Considering the relatively lower risk, this is more than we can hope for over time. The main reasons behind this are declining interest rates and narrowing spreads. The spreads in US and European high yield space is almost back to pre-financial crises levels, thus we want to take down the risk. We have decided to book profit in the BlueBay Investment Grade Fond. The fund has been a very good investment returning 4.93% year to date. The interest rate duration is 3.71 years, thus a potential rise in long rates will hit the fund. In addition we are reducing the weight in Muzinich Short Duration High Yield Fund from 10% to 5%. We are replacing these two holdings (10%) with the Carnegie Corporate Bond Fund. The average credit risk in this well diversified Nordic corporate bond fund is BBB and the interest rate duration is 1.6 years.

We keep the 40% equity weight, but will probably gradually reduce this if the current market performance keeps up only based on multiple expiation and not sound earnings growth.   

Investments Portfolio
Equities  
J O Hambro ' European Select Values Fund 10,0%
Fidelity Asian Special Situations 10,0%
SEB Nordic Focus 10,0%
TreeTop Global Opportunities 10,0%
Sum Equities 40,0%
   
Fixed Income  
Norwegian High Yield Bonds* 25,0%
BlueBay Emerging Market Bond Fund 10,0%
BlueBay High Yield Fund 10,0%
Muzinich Short Duration High Yield 5,0%
Carnegie Corporate Bond Fund 10,0%
Sum Fixed Income 60,0%

 *Norwegian High Yield Bonds: Siem Offshore 2018, Color Group 2015 and Aker 2015

Return 2008 2009 2010 2011 2012 2013 30.06.14
SEB NAP -6,73% 26,55% 6,45% 0,17% 12,00% 13,01% 3,75%
Benchmark** -12,77% 11,92% 6,01% -1,06% 8,23% 15,27% 3,51%
Outperformance 6,04% 14,63% 0,44% 1,23% 3,77% -2,26% 0,24%
MSCI World -30,06% 26,51% 10,57% -4,96% 16,42% 29,57% 5,82%