Market Comments - Q3 2022

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Central banks’ attempts at fighting the highest inflation levels for several decades set the agenda in the financial markets in Q3. Over the quarter, the European Central Bank (ECB) hiked its rate from -0.50% to 0.75% and closed almost a decade with negative interest rates. In the US, the Fed also chose an aggressive line and hiked its rate from 1.75% to 3.25% - simultaneously with a commenced reduction of the bonds which were subject to supportive purchases during the coronavirus crisis.

Generally, central banks worldwide are busy tightening their monetary policies. Presumably to avoid the trend from the 1970s when high inflation levels led to higher wage demands and hence started a negative spiral which resulted in even higher inflation levels. Right now, it seems that central bank focus is on combating inflation – also even though this happens to the detriment of a slowdown in economic growth.

Until mid-August, the market had hoped that the central banks would, based on the slowdown in economic growth in H1, take less aggressive action in relation to interest-rate hikes. This resulted in declining interest rates, which paved the way for a decent comeback to the equity market. This assessment was sharply revised following the annual central bank meeting in the US in August. On this occasion, the Fed and the ECB made it clear that combating inflation right now has top priority, which again resulted in rising interest rates and put pressure on the equity market for the rest of the quarter.


The fund*



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* See past performance under the tab Past Performance

Right now
We increased our equity exposure towards the end of June but reduced it again already at the beginning of August after the market sentiment had in the course of merely one month moved from pessimism to optimism. At the beginning of Q4, the financial markets were again driven by pessimism with prospects of high inflation, monetary policy tightening, slowing growth and geopolitical tensions due to the war in Ukraine. As in June, it has made both equities and bonds more attractive. As in June, we are therefore considering to adjust the composition of the portfolio and more specifically the proportion of equities.

Please note
Past performance is not a reliable indicator of future results. The value of and return on your investment may fall, and you may not get back the full amount invested. An initial charge is usually made when you purchase and sell units. The fund may invest in instruments denominated in various currencies. At least 75% of the fund assets will at all times be invested in EUR or hedged to EUR. You should be aware that changes in exchange rates may have an adverse effect on your investment. This may also be the case if EUR is not your base currency.
Information in this text should not be regarded as investment advice, and investors should consult their own investment and tax advisers before buying or selling.