Sweden’s Simplicity sells out of Russian corporate bonds

Swedish asset manager Simplicity has reported that its Global Corporate Bond fund sold out of three Russian names – Lukoil, Rosneft and Vimpelcom – in the past month as a direct result of rising geopolitical tensions across Europe.

The manager says in its most recent note on the fund that although it obtained good prices, it sold out of the holdings as soon as events around Crimea turned ‘hot’.

“The reason was not the company specific risk but the political risk in Russia that we wanted to avoid, all to reduce the risk to the fund,” the manager said.

Meanwhile, the portfolio overall gained some 0.68% through March, which was better than expected, the manager added. Above all it was bonds from emerging markets that did well, helping the fund to a year-to-date return of 1.8%.

Further evidence of the strength of emerging markets generally was also reported for the manager’s own Simplicity Indien and Simplicity Afrika funds.

The Indian rupee strengthened through the past month along with foreign capital inflows to the country. Against this backdrop the fund gained 4% through March.

The rand also strengthened along with the local stock market, which saw the Afrika fund up about 6% over the past month.

Following the Global Corporate Bond portfolio adjustments, the latest holdings and country exposures are as follows:

10 biggest holdings
BAYPORT1 170612 (SE)  
DANSKE BANK1 170215 (DK)  
DNO 160411 (NO)  
DPP 180216 (DE)  
BNP 160713 (FR)  
DNB 170329 (NO)  
SHIP FINANCE 171019 (NO)  
STORMGEO 170131 (NO)  
COUNTRY GARD 170422 (HK)  
CARGOTEC 200331 (FI)  
Country Share
Sweden 39%
Norway 14.2 %
Hong Kong 7.5 %
Finland 7.1 %
France 5.9 %
Denmark 5.8 %
Netherlands 5.7 %
Germany 3.2 %
USA 2.4 %
Iceland 2.2 %


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