Finserve

Positive Return in a Volatile Stock Market – GSF +1.40% and 25.67% for the Year
The fund delivered stable returns in August despite a volatile stock market environment. Although the strengthening of the Swedish krona resulted in a relatively large negative contribution, the fund still achieved a positive return of 1.40%, bringing the total return for the year to 25.67%.
Cybersecurity companies had a strong month following quarterly reports from Fortinet, Cloudflare, CrowdStrike, Intel, and Cisco. Fortinet stood out with a strong report, showing increased margins and, as a result, higher profits. The outlook is also positive, with the company seen as having a strong market position in the sector's high and robust growth.

Best & Worst performing holdings

Best			Worst
FORTINET	31,41%		SAFRAN	-2,22%
CRWDSTRIKE	17,12%		BABCOCK	-1,88%
ROLLS ROYCE	11,25%		SAAB	-1,82%
PALO ALTO	10,31%		MICROSOFT CORP	-1,25%
ZSCALER	9,98%		GEN DYNAMICS	-0,29%

The best-performing holding was Fortinet (+31%) after a strong quarterly report, followed by CrowdStrike after a recovery. The cybersecurity sector was strong, as shown above. European defense companies like Safran, Babcock, and SAAB had the weakest performance during the month.

Market Performance
After the sharp decline in August, experts has competed in explaning why the stock market rebounded, and why the previous decline should be viewed as an overreaction. Arguments used was. better inflation data was reported, a dovish Fed chair spoke at Jackson Hole, and strong reports from tech companies like Palo Alto and Cisco. We saw a strong recovery in August, but market anxiety has resurfaced at the beginning of September. Tech giants like NVIDIA have dropped significantly, along with other chipmakers. The likelihood of a U.S. recession has increased according to most forecasts, and weaker job figures have come from the U.S. Given that the U.S. is the main economic driver, a U.S. recession would have a significant impact and cause concern. The market is also worried that the Fed is acting too slowly, even though its direction and target interest rate levels seem reasonable. The likelihood of the Fed cutting rates by 50 basis points in September has increased according to futures contract pricing. The fund remain positive to the US market over the medium term but we should expect higher levels of volatility than previous years.
There is much talk about sector rotation and the current state of the stock market after recent declines. It requires market timing to enter the market correctly, which is no easy task. These rotations can also reverse relatively quickly, and defensive sectors have already seen an uptick. The defense sector is also expected to continue with high volatility levels, especially because of sector price performance.
We remain confident in our defense and security themes, which have strong long-term growth prospects. The defense sector has lower sensitivity to economic cycles than the overall market. Geopolitical risk in the short and medium term remains elevated, driven by global strategic competition between superpowers and regions. There is an increasing level of military presence, defense buildup, cyberattacks, and industrial espionage. We are already transitioning to a more multipolar world order, where regional powers seek to establish spheres of influence with limited foreign interference.
Geopolitical competition has initiated a global structural change, which includes ongoing protectionism, de-risking, and near-shoring. These factors directly affect global growth and can also lead to increased inflation. This trend is central to the stock market and is the reason why all major financial institutions consider geopolitical risk as one of the most significant risks moving forward.
The dominant trends drive investments in defense and security over time, providing a good foundation for growth, returns, and risk diversification going forward.