Finserve

Nordic Factoring Fund reports a 0.59 percentage point increase compared to the previous month. The year-to-date return stands at 5.45% after fees, with a volatility of 0.3%, resulting in an annual Sharpe ratio of 12.43. 

Investing in Finserve Nordic Factoring Fund provides investors access to a well-diversified portfolio with over 1,000 high-credit-rating counterparties and an asset class that demonstrates low correlation with other asset classes, such as interest rates, equities, traditional credits, currencies, and commodities. 

The portfolio consists of approximately 150,000 invoices issued by more than 1,000 companies, with an average invoice amount of 2,500 EUR. 

During October, the risk level of the credit portfolio remained unchanged. The strategy has consistently achieved its target returns and displayed low volatility since inception, with no negative monthly returns. 

No new investments were made during the period, but the fund management believes that the current portfolio composition is well-positioned for the upcoming market developments over the current quarter and beyond. 

We continue to see good prospects for attractive risk-adjusted returns with low volatility. The underlying counterparties in the portfolio have an average credit rating of A, and the entire portfolio is protected by credit insurance, which safeguards against bankruptcies. The low insurance premium reflects the portfolio’s composition, which the insurer views as satisfactory and indicates the quality of the underlying processes and counterparties. 

Forecasts 
With the Riksbank’s low inflation figures, the likelihood of future rate cuts is strengthening, which increases the fund’s long-term competitiveness and makes it more attractive compared to other low-risk investments, which are likely to yield lower returns in a low-interest environment. 

Two major events marked October: the U.S. election and the Riksbank’s interest rate announcement. As expected, Trump won the election, and the new administration could indirectly impact Swedish interest rates and inflation. The new U.S. policies may lead to increased government spending and a higher inflation rate, potentially prompting the Federal Reserve to pause or raise rates to counteract inflation, which could pressure long-term rates in other countries, including Sweden. On the other hand, Trump has promised tax cuts, which would stimulate the economy but increase debt. 

The Riksbank chose to cut rates by 0.50%, which was expected. Previous and current forecasts indicate further cuts, though there is a risk of changes depending on the effects of U.S. monetary policy on the market. 

The fund’s current strategy and portfolio positioning are prepared for a scenario of potential market uncertainty and rising credit spreads. By maintaining a diversified portfolio and selecting counterparties with strong balance sheets, the fund is well-equipped to handle market stress. 

IFRS 9 
The provisions in the portfolio are very low. 100% of the fund’s exposure falls into category 1, and the collateral is based on over 30,000 invoices pledged in favor of the fund. The invoices are rolled with payment terms of 30 to 90 days and are credit-insured, both with and without recourse.