CARNEGIE CORPORATE BOND November 2014

CARNEGIE CORPORATE BOND
November 2014
Value
management
Value management
 We look long-term at companies’ earnings capacity
and cash flows.
 Dividends and strong balance sheets.
 Low turnover in the fund.
Analysis
HOW WE WORK
 Company visits are an important component of the
management.
 Supporting documentation consists of both our own
analysis and external analysis.
Fundamental analysis
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Active
management
Active management
 We buy companies we believe in, not because they
weigh heavily in an index.
Liquid
investments
MANAGEMENT
PHILOSOPHY
 To reduce risk we prefer liquid securities, making it
easier to find buyers if it is necessary to sell.
Liquid investments
November 4, 2014
2
WHY INVEST IN CORPORATE BONDS?
IN GENERAL
CARNEGIE
CORPORATE BOND
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
Opportunity to receive higher returns than with traditional fixed income products.

Diversify the portfolio with a new asset class.

Corporate bonds are still priced low relative to government bonds.

A growing interest from Nordic companies seeking financing through corporate
bonds, presents opportunities for the fund.

Only bonds issued by companies throughout the Nordic region.

Bonds in foreign currency are hedged to their currency class (SEK, EUR, DKK or
NOK).


5-star overall rating from Morningstar.
”Best Cautiously Managed Fund” - MoneyMate Fund Award 2013.
November 4, 2014
3
MARKET DEVELOPMENT
GROWING MARKET FOR CORPORATE BONDS (SWEDEN)
COMMENTS
120000
SEKm
100000
Good diversification of companies and sectors.
1.
80000
60000
40000
20000
2.
2011-2013: +60 new companies. YTD: 25+ new
companies.
3.
Far to international levels (around 20-25 percent in
Sweden compared to 70 percent in the USA.)
0
2008 2009 2010 2011 2012 2013 YTD14
Corporate Bonds
Examples of
issuers
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…whereof HY
4.
Important to shrink the banking sector (bank balance sheet
as of GDP) to ensure financial stability.
November 4, 2014
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BROAD MANDATE CREATES OPPORTUNITIES
Carnegie
Corporate Bond
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Ratings
S&P
AAA
AA+
AA
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
B
BCCC+
CCC
CCCD
Moodys
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa
Ca
C
Comments
Investment grade
Investment grade/High grade
Investment grade/High grade
Investment grade/High grade
Investment grade/upper medium grade
Investment grade/upper medium grade
Investment grade/upper medium grade
Investment grade/medium grade
Investment grade/medium grade
Investment grade/medium grade
High yield/speculative grade
High yield/speculative grade
High yield/speculative grade
High yield
High yield
High yield
High yield
High yield
High yield
Default
Investment Grade funds
High Yield funds
November 4, 2014
5
PERFORMANCE
TOTAL RETURN
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
Carnegie Corporate Bond (EUR)
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Gov. Bonds
Year
Car. Corporate bond (SEK)
Car. Corporate bond (EUR)
Swe. Gov. Bonds
2014
3,7%
3,2%
10,5%
2013
5,6%
n.a
-3,3%
2012
11,6%
n.a
1,6%
2011
3,3%
n.a
13,3%
2010
7,8%
n.a
2,0%
2009
6,8%
n.a
3,1%
November 4, 2014
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FUND MANAGER COMMENT
NORDIC BANKS ARE STRONG
October was an extremely busy month, with large
market movements in many risk assets, including
equities and high-yield bonds. In addition to the general
concern in the market, some Norwegian bonds with
lower credit ratings were also impacted by the falling
price of oil.
November
2014
almost zero. These are remarkably low levels.
Meanwhile, the Swedish 10-year rate closed at 1.18
percent and came close to the level of summer 2012,
when the euro crisis was at its worst.
In contrast, bonds with high credit ratings had a strong
month, while the yield on long-term government bonds
fell broadly, pushing up the price of these bonds.
We were fairly active in October, and sold some bonds
with lower credit ratings in the secondary market, and
towards the end of the month we participated in
ComHem's new issue. The Carnegie Corporate Bond
fund was down 0.28 percent in October, and is up 3.8
percent for the year. The interest duration is 1.4 years,
and the risk level of the fund has been kept balanced.
The decline in long-term yields was driven by lower
expectations for inflation and growth, particularly in
Europe, as well as concern that the US is not
recovering at the expected pace. October ended on a
strong note, and many of these asset classes
rebounded sharply.
Over a cycle, we aim to deliver a return of 4-6 percent.
Our focus is at the same time to have a balanced
portfolio, regardless of external conditions. Considering
the current low interest rate environment, a realistic
expected annual return for the portfolio is around 2,75
percent.
The ECB and the European Banking Authority released
the results of their stress tests and their review of 130
European banks' assets. As expected, the Nordic
banks were strong and the only ones that did not pass
the tests were 13 southern European banks.
- Niklas Edman
Low inflation expectations led the Riksbank to cut
interest rates to a historic 0 percent. The German twoyear rate is negative and the Swedish two-year rate is
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GEOGRAPHICAL DISTRIBUTION
31 Oct
SWEDEN 42%
2014
NORWAY 30%
Bergvik Skog
3,4%
Aker Asa
3,0%
Ica gruppen
2,0%
Lock As
2,4%
Skandinaviska Enskilda
1,7%
Dof Subsea Asa
1,9%
Bravida Holding
1,7%
Dof Asa
1,8%
Solor
1,6%
Teekay Offshore Partners
1,7%
Portfolio
FINLAND 14%
DENMARK 10%
Neste Oil Oyj
2,3%
Danske Bank A/S
3,7%
Tvo
1,9%
Vestas Wind Systems A/S
1,5%
Citycon Oyj
1,6%
Dsv As
1,3%
Kesko Oyj
1,2%
Dfds A/S
0,8%
Euro Directories Bondco
1,0%
Jyske Bank A/S
0,5%
Other 5%
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8
FUND DATA AND SECTOR EXPOSURE
31 Oct
Rank
1
2
3
4
5
6
7
Rating
overview
AAA
AA+
AA
AAA+
A
A-
8
9
10
11
12
13
14
BBB+
BBB
BBBBB+
BB
BBB+
3,6%
15,1%
5,9%
14,8%
3,7%
12,6%
5,6%
15
16
12
B
BOR
Sum 0,5%
12,2%
1,5%
0,4%
100,0%
Share
16,4%
1,0%
0,0%
0,0%
2,3%
0,3%
4,5%
2,0%
Average rating
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Comment
2014
Cash held at SEB
49%
51%
9,48
Other data
Current yield ex fees
Duration (yrs)
Credit duration (yrs)
AuM (SEK mio)
2,9%
1,4
4,1
13 786
Maturity interval
<1 yr
1-3 yrs
3-5 yrs
Other
Total
Share
4%
19%
56%
21%
100%
SECTORS
Covered bonds
Financials
Energy
Industrials
Oil services
Services
Materials
Transportation
Real Estate
Consumer Staples
Investment Companies
Media
Oil & Offshore
Health Care
TMT
Consumer Discretionary
Governments
Cash and other
Total
16,4%
15,4%
9,5%
9,1%
8,3%
8,3%
7,0%
6,1%
4,4%
4,0%
3,0%
1,8%
1,5%
1,1%
1,0%
1,0%
0,7%
1,6%
100,0%
November 4, 2014
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FUND INFORMATION
Fund manager: Niklas Edman
Born 1982. M.Sc. in Business and
Administration from Stockholm School
of Economics. Niklas has worked in
the finance industry since 2007, at
Carnegie Investment Bank and
Armada Mezzanine Capital. Employed
since January 2012.
Fund manager: Babak Houshmand
Start date
1 October 1990
Management fee
0,95%
Front load
0%
Back load
0%
Performance fee
0%
Risk class
2 of 7
Rating Morningstar
Born 1982. M.Sc. in Business and
Administration from Stockholm
University. Babak has worked in the
finance industry since 2007, at SEB
and Öhman Asset Management.
Employed since September 2014.
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November 4, 2014
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EXPOSURE
Share
Shadow
rating
SWEDBANK HYPOTEK AB
4,6%
AAA
SEB Hypotek
3,9%
AAA
DNB BOLIGKREDITT AS
NORDEA HYPOTEK AB
LANSFORSAKRINGAR HYPOTEK
LANDSHYPOTEK AB
CITY OF VELLINGE SWEDEN
DANSKE BANK HYPOTEK
LINKOPINGS STADSHUS AB
OREBRO KOMMUN
SPAREBANK 1 NAERINGSKRED
SPAREBANKEN NORD NORGE
BKK AS
SPORVEIEN OSLO AS
KESKO OYJ
NOOA BANK
ALFA LAVAL TREASURY INTE
FORTUM VARME HOLDING SAM
GJENSIDIGE FORSK
AP MOELLER-MAERSK A/S
DNB BANK ASA
DANSKE BANK A/S
SPP LIV FORSAKRINGS AB
SUOMEN HYPOTEEKKIYHDISTY
ARLA FOODS FINANCE
DSV AS
SKANSKA FINL SERVICES AB
SCHIBSTED ASA
SANDVIK AB
SAMPO OYJ
PARETO BANK ASA
ICA GRUPPEN AB
TVO
NESTE OIL OYJ
NASDAQ OMX GROUP
NORDEA BANK AB
BILLERUDKORSNAS AB
SVENSK FASTFIN II AB
DELARKA AB
VESTAS WIND SYSTEMS A/S
SKANDINAVISKA ENSKILDA
CITYCON OYJ
HUHTAMAKI OYJ
AUSTEVOLL SEAFOOD
DFDS A/S
WILH. WILHELMSEN ASA
SWEDBANK AB
0,9%
3,1%
0,9%
1,8%
0,5%
0,7%
0,4%
0,2%
0,5%
0,3%
1,0%
0,6%
1,2%
0,7%
0,3%
0,4%
0,2%
0,5%
0,9%
3,7%
0,4%
0,8%
0,4%
1,3%
0,3%
0,8%
0,6%
0,2%
0,5%
2,0%
1,9%
2,3%
1,2%
1,2%
0,4%
0,9%
0,6%
1,5%
1,7%
1,6%
0,5%
0,3%
0,8%
0,1%
0,7%
AAA
AAA
AAA
AAA
AAA
AAA
AA+
AA+
AA+
A
AAAABBB+
BBB+
BBB+
BBB+
BBB+
BBB+
BBB+
BBB+
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBBBBBBBBBBBBBBBBB
BBBBBBBBBBBBBBB-
Investment
Carnegie Fonder AB
31 Oct
High yield
BERGVIK SKOG AB
SEFYR VARME AB
SOLOR GROUP AB
SAGAX AB
SWEDISH ORPHAN BIOVITRUM
HEIMSTADEN AB
ARISE AB
OREXO AB
COMHEM
GOLDEN HEIGHTS AB
WEST AIR EUROPE AB
LAVARE HOLDING AB
TROAX GROUP AB
CANDYKING HOLDING AB
DIAMORPH AB
KAHRS HOLDING AB
BRAVIDA HOLDING AB
VERISURE HOLDING AB
ETRAVELI
NOBINA EUROPE AB
OVAKO AB
UNILABS SUBHOLDING AB
3,4%
0,8%
1,1%
0,7%
0,0%
0,7%
0,9%
0,4%
1,1%
0,3%
0,4%
0,3%
0,5%
0,4%
0,4%
0,5%
1,7%
0,9%
0,4%
0,2%
0,4%
0,7%
BB+
BB+
BB
BBBBBBBBBBBBB+
B+
B+
B
B
B
B
B
B
B
B
BB-
AMER SPORTS OY
UPM-KYMMENE OYJ
METSALIITTO OSUUSKUNTA
SANOMA OYJ
AR PACKAGING GROUP
AC ALPHA OYJ
EURO DIRECTORIES BONDCO
0,7%
0,9%
1,0%
0,0%
0,5%
0,4%
1,0%
BB+
BB
BBBBBBB+
B
ARION BANK HF
ISLANDSBANKI
EXMAR NV
SELECTA GROUP BV
0,7%
1,2%
0,4%
0,7%
BB+
BB+
B
B
JYSKE BANK A/S
GLOBAL CONNECT A/S
0,5%
0,5%
BB+
BB-
AKER SOLUTIONS ASA
AKER ASA
STOLT-NIELSEN S.A.
PROSAFE SE
SEADRILL LTD
COLOR GROUP ASA
DIGIPLEX FETSUND AS
BAKKAFROST P/F
0,3%
3,0%
1,1%
0,6%
0,4%
0,9%
0,4%
0,1%
BB+
BB+
BB+
BB+
BB
BB
BB
BB-
2014
TEEKAY OFFSHORE PARTNERS
TEEKAY CORP
TEEKAY LNG PARTNERS
KLAVENESS SHIP HOLDING A
PIONEER PB PROP III
CRAYON GROUP HOLDING
LOCK AS
DET NORSKE OLJESELSKAP
VERITAS PETROLEUM SERVIC
DOF SUBSEA ASA
NORLANDIA CARE GROUP AS
E FORLAND AS
DOF ASA
SALAR BIDCO AS
INFRATEK ASA
BEERENBERG HOLDCO II AS
ALBAIN BIDCO NORWAY
STORMGEO HOLDING AS
ATLANTIC OFFSHORE AS
HOSPITALITY INVEST AS
Creditindicies
Currency hedges
Liquidity
Total
1,7%
0,8%
1,1%
0,4%
0,3%
0,5%
2,4%
1,1%
0,4%
1,9%
0,3%
0,4%
1,8%
0,6%
0,5%
0,7%
0,8%
0,4%
0,3%
0,4%
BBBBBBBBBBBBBBBBB+
B+
B+
B
B
B
B
B
B
B
BOR
0,0%
0,0%
1,6%
100,0%
November 4, 2014
11
Disclaimer
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
All material in this presentation is provided for general guidance and informational purposes only and relates to the law of Sweden
and/or European law as applicable. The material is under no circumstances to be used or considered as financial advice or an offer to
sell, or a solicitation of any offer to buy any securities. The material is obtained from various sources; while all reasonable care has
been taken to ensure that the material is true and not misleading, Carnegie does not guarantee its accuracy or completeness.

The presentation and its content and material does not have regard to any specific investment objectives, financial situation or the
particular needs of any specific person who may access this presentation. Investors should seek financial advice regarding the
appropriateness of investing in any securities or investment strategies discussed or recommended in this presentation and should
understand that statements regarding future prospects may not be realized. Investors should also understand that past performance is
not necessarily a guide to future performance.

The Carnegie Group of Companies ("Carnegie"), its partners, staff and associated companies exclude all and accept no liability
whatsoever (to the extent permitted by applicable law) for any direct or consequential losses, costs, claims, damages, expenses or
proceedings of whatever nature incurred or suffered by you arising directly or indirectly in connection with the use of this presentation
and its content and material, or due to any unavailability of part or all of presentation or any material or related services. Readers of
this presentation who are investors in the U.S. should be aware that investing in non-U.S. securities entails certain risks. The securities
of non-U.S. issuers may not be registered with, nor be subject to the current informational reporting and audit standards of, the U.S.
Securities and Exchange Commission.
November 4, 2014
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