The Odin Sverige C SEK fund rose 1.93 percent in May, underperforming its benchmark index which climbed 3.03 percent. Since the turn of the year, the fund has returned 0.64 percent, trailing the index's 9.36 percent gain. This is according to a monthly report from fund managers Jonathan Schönbäck, Peter Nygren, and Philip Mesch.

The management team initially notes that equity markets continued their upward trajectory in May, supported by hopes of further de-escalation of conflicts in the Middle East.

The end of the month also marked the conclusion of the first-quarter reporting season. Of the fund's 27 holdings, nine companies are reported to have exceeded expectations, eleven performed in line with forecasts, and seven fell short of market expectations.

In terms of performance, the primary contributors were ABB, EQT, and Sweco. According to the managers, ABB continues to benefit from demand for data center equipment and the company's exposure to structural growth within electrification.

Meanwhile, EQT received a boost after being selected by the European Commission to manage the Scaleup Europe Fund, a 5 billion euro European fund. The mandate is intended to provide more growth capital for European tech companies and reduce reliance on US financing. Management views the announcement as a confirmation of EQT's strong market position.

Conversely, the weakest contributions came from Hemnet, Sagax, and Axfood. Sagax continued its decline following a slightly weaker-than-expected report, characterized by rising vacancies and higher interest costs. The managers highlight the company's strong track record but maintain a low weighting due to valuation concerns.

Among other company-specific events, Hexagon completed the spin-off of Octave at the end of the month. Following the transaction, Hexagon is a more streamlined metrology company, while Octave focuses on software for the design, construction, operation, and maintenance of critical infrastructure. The fund's aggregate position in Hexagon and Octave remained unchanged, and the number of holdings increased to 28.

Furthermore, Essity held a capital markets day and announced a strategic review of Consumer Tissue. The managers are positive, as the business area is described as more capital-intensive and volatile than other segments. The evaluation period is expected to last 6-12 months.

At the portfolio level, the fund increased its holding in Lifco. The purchases were financed by reducing positions in Addtech and Lagercrantz, after valuation differentials were deemed to have become too wide.

Looking ahead, management continues to see attractive valuations, particularly among small-cap stocks. Portfolio companies are described as having low leverage, and the weaker share price performance is not considered to reflect fundamental developments.

At month-end, the fund's three largest equity holdings were Assa Abloy, Astra Zeneca, and ABB, with portfolio weights of 6.84, 6.11, and 5.62 percent, respectively.

Regarding geographical distribution, the fund had its largest exposure to Sweden at 87.33 percent, followed by the UK and Switzerland at 6.11 and 5.62 percent, respectively.

Odin Sverige C SEK, %May, 2024
Fund MTD, percentage change1.93
Index MTD, percentage change3.03
Fund YTD, percentage change0.64
Index YTD, percentage change9.36