February: rising long-term interest rates changed market behavior

work from home

We saw a sharp turnaround in the market in February, where the entire upswing, supported by good reports, disappeared in fear of higher interest rates during the latter part of the month. The reports from the tech companies were, as expected, strong during the quarter, but we did see a mixed development for share prices, despite the fact that most reached a consensus.

The rising long-term interest rates also changed the behavior in the market, where work-from-home was traded for a long time in a lump sum against the recovery shares. Now the market instead started selling the companies with the highest multiples and those that performed best. This meant that old correlations no longer apply and we have adjusted our positions slightly to get a balanced risk in the portfolio.

Industry data continues to show strength in the trends we invest in. Semiconductor equipment data was at a record high in January and advertising purchases on the Internet platforms are accelerating. However, we must remember that the comparability figures will be tougher from March in the companies that have benefited from work-from-home. In the portfolio, we have reduced somewhat in the companies with the highest beta and sold our position in Zynga as it has performed strongly. On the short side, we have continued to be cautious about shorting individual shares. The fund's return was 1,72% in February.

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