How the Krona could make your assets shine

The Swedish Krona has hit its lowest levels vis-à-vis the Euro since the crisis year of 2009. At the same time, the Swedish economy is growing above trend, unemployment has been on a downward trend since 2010 and public debt is lower than in most European countries. Something has to give, it seems. Given that important drivers behind recent SEK weakness should fade over the coming quarters, the odds are high for the currency to regain ground against the Euro. An undervalued currency therefore is an investment opportunity, not a threat – especially for Euro based investors.

Two factors help explain the recent discrepancy between strong macro fundamentals and an “unloved” currency.

1. Concerns around the Swedish housing market made investors smell bubble risk. Stockholm apartment prices have fallen 12% from the peak trough. But this largely reflects regulatory one-off tightening measures with the aim of preventing the housing market from overheating. This has brought short term pain but should lead to long term gains.
2. Disappointing inflation figures caused dovish Riksbank surprises, pushing out the first expected rate hike. But don’t forget that the Euro Area inflation has disappointed as well, without the ECB leaning in a more dovish direction – yet. This is still to come in our view, as Euro Area growth is slowing rapidly. The ECB should therefore follow the Riksbank – toning down its tapering ambitions – not the other way around.

→ Bottom line: Risk-reward favours the Swedish Krona versus the Euro at the current juncture.

What does it mean for EUR based fixed income investors?

When managing a Euro-based low risk allocation, one should consider the rock-solid Swedish fiscal balances and a yield mark-up relative to e.g. Germany: Swedish core fixed income is a natural target to diversify this type of portfolio. Swedish Government Bonds trade with a similar yield spread to German Bunds as French Government Bonds. However, Sweden’s public indebtedness is less than half that of France. So far, so good. Now add a currency element to these risk reward considerations. Given its cheapness relative to strong fundamentals, SEK exposure means additional upside for an unhedged Swedish bond portfolio. Euro based investors can therefore seize the opportunity a cheap Krona offers in combination with attractive Swedish yields relative to core Euro area bonds.

Nordea’s local expertise

There are many attractive opportunities in the Swedish Fixed income market. Are you looking for very high quality assets? Sweden offers one of the safest covered bond and government bond markets: a clear alternative for government bonds in Core Europe. Are you looking for a shorter term exposure? Short duration Floating Rates Notes (FRNs) and commercial paper represent a wide range of opportunities as well. Nordea has been managing Nordic fixed income portfolios for more than two decades and has strong solutions in place to meet this range of needs. Over the years, our Swedish Fixed Income team, based in Stockholm and accountable for more than EUR 16bn of AuM1 in this universe, has built a strong framework and a proven investment process to add value in their unique local market. With a team of five portfolio managers – with an average of more than 13 years of experience at Nordea! – our Swedish Fixed Income offering opens the door for your assets to shine.

Nordea Swedish Fixed Income in a nutshell

Our dedicated and experienced investment team aims at exploiting the opportunities of the Swedish Fixed Income market with a dynamic investment strategy: the top-down analysis provides the view on duration, yield curve exposure and credit exposure, while the bottom-up credit analysis supports in the search for undervalued securities. Risk budgeting remains a key element to the portfolio construction to achieve high risk-adjusted returns.

Nordea 1 – Swedish Bond Fund
– The fund is a clear diversifier for your core European government bond allocation,
– Investing in the safest assets of the fixed income market, with currently 85%+ in government and
covered bonds.

Nordea 1 – Swedish Kroner Reserve
– The fund invests in one of the safest and strongest economies in the world, yet with low duration,
– Investing in high quality FRNs, commercial papers and covered bonds.

Nordea Asset Management

  Nordea 1 – Swedish Bond Fund Nordea 1 – Swedish Kroner Reserve
  LU0064320186 (BP-SEK) LU0064321663 (BP-SEK)
Modified Duration 7.10 0.53
Average Weighted Coupon          2.37% 0.73%
Yield to Maturity 0.62% 0.11%
Average Weighted Rating AA+ BBB

Source: Nordea Investment Funds S.A. as of 30.04.2018

About Nordea Asset Management

Nordea Asset Management (NAM, AuM 216.5 bn EUR*), is part of the Nordea Group, the largest financial services group in Northern Europe (AuM 320.1 bn EUR*). NAM offers European and global investors’ exposure to a broad set of investment funds. We serve a wide range of clients and distributors which include banks, asset managers, independent financial advisors and insurance companies.

Nordea Asset Management has a presence in Cologne, Copenhagen, Frankfurt, Helsinki, London, Luxembourg, Madrid, Milan, New York, Oslo, Paris, Sao Paulo, Singapore, Stockholm, Vienna and Zurich. Nordea’s local presence goes hand in hand with the objective of being accessible and offering the best service to clients.

Nordea’s success is based on a sustainable and unique multi-boutique approach that combines the expertise of specialised internal boutiques with exclusive external competences allowing us to deliver alpha in a stable way for the benefit of our clients. NAM solutions cover all asset classes from fixed income and equity to multi asset solutions, and manage local and European as well as US, global and emerging market products.

*Source: Nordea Investment Funds, S.A., 31.03.2018

The sub-funds mentioned are part of Nordea 1, SICAV, an open-ended Luxembourg-based investment company (Société d’Investissement à Capital Variable), validly formed and existing in accordance with the laws of Luxembourg and with European Council Directive 2009/65/EC of 13 July 2009. This document is advertising material and does not disclose all relevant information concerning the presented sub-funds. Any investment decision in the sub-funds should be made on the basis of the current prospectus and the Key Investor Information Document (KIID), which are available, along with the current annual and semi-annual reports, electronically in English and in the local language of the market where the mentioned SICAV is authorised for distribution, without charge upon request from Nordea Investment Funds S.A., 562, rue de Neudorf, P.O. Box 782, L-2017 Luxembourg, from the local representatives or information agents, or from our distributors. Investments in derivative and foreign exchange transactions may be subject to significant fluctuations which may affect the value of an investment. Investments in Emerging Markets involve a higher element of risk. The value of shares can greatly fluctuate as a result of the sub-fund’s investment policy and cannot be ensured. Investments in equity and debt instruments issued by banks could bear the risk of being subject to the bail-in mechanism (meaning that equity and debt instruments could be written down in order to ensure that most unsecured creditors of an institution bear appropriate losses) as foreseen in EU Directive 2014/59/EU. For further details of investment risks associated with these sub-funds, please refer to the relevant Key Investor Information Document (KIID), available as described above. Nordea Investment Funds S.A. has decided to bear the cost for research, i.e. such cost is covered by existing fee arrangements (Management-/Administration-Fee). Nordea Investment Funds S.A. only publishes product-related information and does not make any investment recommendations. Published by Nordea Investment Funds S.A., 562, rue de Neudorf, P.O. Box 782, L-2017 Luxembourg, which is authorized by the Commission de Surveillance du Secteur Financier in Luxembourg. Further information can be obtained from your financial advisor. He/she can advise you independently of Nordea Investment Funds S.A. Additional information for investors in Switzerland: The Swiss Representative and Paying Agent is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, CH-8002 Zurich, Switzerland. Additional information for investors in Germany: The Information Agent in Germany is Société Générale S.A. Frankfurt Branch, Neue Mainzer Straße 46-50, D-60311 Frankfurt am Main. A hard copy of the above-mentioned fund documentation is also available from here. Additional information for investors in Austria: Sub-paying Agent and Representative in Austria is Erste Bank der Österreichischen Sparkassen AG, Am Belvedere 1, A-1100 Vienna. Additional information for investors in the Netherlands: Nordea 1, SICAV is a Luxembourg Undertaking for Collective Investment in Transferable Securities (UCITS) registered in the Netherlands in the register kept by the AFM, and as such is allowed to offer its shares in the Netherlands. The AFM register can be consulted via Additional information for investors in France: With the authorisation of the AMF the shares of the sub-funds of Nordea 1, SICAV may be distributed in France. Centralising Correspondent in France is CACEIS Bank, located at 1-3, place Valhubert, 75013 Paris. Investors are advised to conduct thorough research before making any investment decision. Additional information for investors in Belgium: The Representative Agent in Belgium is BNP Paribas Securities Services S.C.A., Brussels branch, 25 Rue de Loxum, Brussels, B-1000-Belgium. A hard copy of the above-mentioned fund documentation is available upon demand free of charge. Additional information for investors in Spain: Nordea 1, SICAV is duly registered in the CNMV official registry of foreign collective investment institutions (entry no. 340) as authorised to be marketed to the public in Spain. The Depositary of the SICAV’s assets is, J.P. Morgan Bank Luxembourg S.A. In Spain, any investment must be made through the authorised distributors and on the basis of the information contained in the mandatory documentation that must be received from the SICAV’s authorised distributor prior to any subscription. The Representative Agent is Allfunds Bank S.A., Paseo de la Castellana 9, ES- 28046 Madrid, Spain. A complete list of the authorised distributors is available in the CNMV’s webpage ( Additional information for investors in Portugal: The Management Company of the SICAV, Nordea Investment Funds, S.A., and the Depositary of the SICAV’s assets, J.P. Morgan Bank Luxembourg S.A., are validly formed and existing in accordance with the laws of Luxembourg and authorized by the Commission de Surveillance du Secteur Financier in Luxembourg. Our distributor in Portugal is BEST – Banco Electrónico de Serviço Total, S.A., duly incorporated under the laws of Portugal and registered with the CMVM as a financial intermediary. Additional information for investors in Italy: Fund documentation as listed above is also available in Italy from the distributors and on the website The updated list of distribution agents in Italy, grouped by homogenous category, is available from the distributors themselves, at State Street Bank International GmbH – Succursale Italia, branches (located in the main towns of each region), BNP Paribas Securities Services – Succursale di Milano, Banca Sella Holding S.p.A, Banca Monte dei Paschi di Siena S.p.A., Allfunds Bank S.A. Succursale di Milano, Société Générale Securities Services S.p.A. and on the website Any requests for additional information should be sent to the distributors. Before investing, please read the prospectus and the KIID carefully. We recommend that you read the most recent annual financial statement in order to be better informed about the fund’s investment policy. The prospectus and KIID for the sub-funds have been published with Consob. Additional information for investors in the United Kingdom: Approved by Nordea Bank AB, 5 Aldermanbury Square, London EC2V 7AZ, which is regulated by the FCA in the United Kingdom. Additional information for investors in Sweden: The Paying Agent is Nordea Bank AB (publ), Smålandsgatan 17, Stockholm SE-105 71. The Representative Agent is Nordea Funds Ltd, Swedish Branch, Mäster Samuelsgatan 21, Stockholm, SE-105 71. Additional information for investors in Denmark: The Information and Paying Agent is Nordea Danmark, filial af Nordea Bank AB (publ), Sverige, Strandgade 3, Christiansbro, DK-1401 Copenhagen K. A hard copy of the above-mentioned fund documentation is available here. Additional information for investors in Norway: The Paying Agent is Nordea Bank AB (publ), Filial i Norge, Essendrops gate 7, Postboks 1166 Sentrum, NO-0107 Oslo. The Representative Agent is Nordea Funds Ltd., Norwegian Branch, Essendrops gate 7, Postboks 1166 Sentrum, NO-0107 Oslo. Additional information for investors in Finland: The Paying Agent is Nordea Bank AB (publ), Finnish Branch, Satamaradankatu 5, FI-00020 NORDEA, Helsinki. The Representative Agent is Nordea Funds Ltd, Satamaradankatu 5, FI-00020 NORDEA, Helsinki. Additional information for investors in Latvia: The Representative and Paying Agent is Luminor Bank AS, Skanstes iela 12, Riga, LV-1013. Additional information for investors in Estonia: The Representative and Paying Agent in Estonia is Luminor Bank AS, Liivalaia 45, 10145 Tallinn. Additional information for investors in Lithuania: The Representative and Paying Agent in Lithuania is Luminor Bank AB, Konstitucijos pr. 21A , 03601 Vilnius. Shareholders must evaluate possible investment risks and take this into consideration when making investment decisions. Information for investors in Brazil: Nordea 1, SICAV have not been, and will not be, registered with the CVM and may not be offered or sold in Brazil except in circumstances which do not constitute a public offering or distribution under Brazilian laws and regulations. Investors within Brazil should consult with their own counsel as to the applicability of these laws and regulations or any exemption there from. This material aims to provide information only and does not constitute and should not be construed as an offer to buy or sell or solicitation of an offer to buy or sell any security or financial instrument. Source (unless otherwise stated): Nordea Investment Funds S.A. Unless otherwise stated, all views expressed are those of Nordea Investment Funds S.A. This document may not be reproduced or circulated without prior permission and must not be passed to private investors. This document contains information only intended for professional investors and independent financial advisers and is not intended for general publication. Reference to companies or other investments mentioned within this document should not be construed as a recommendation to the investor to buy or sell the same, but is included for the purpose of illustration.

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