April witnessed a meaningful positive correction on equity markets after a dreadful previous month. The fundamentals behind this correction is widely seen as to be a result of the substantial and swift actions taken on both the monetary and fiscal policy side. These measures will most likely keep economies in standby mode and prevent substantial prolonged damages to economic activity, even though we believe it very well might take into 2022 before economic output has reached pre crisis levels again. The month was on an absolute and relative basis satisfactory for the fund.
Our equity universe saw correlations decrease during the month after the harsh sell down where more or less everything got sold down. Of our three most important themes we saw IT and Healthcare related companies recover strongly during the month. These companies are as we know structural winners in an economy which ever more resembles that of what has been witnessed in Japan during recent decades. The current pandemic environment also makes these sectors standout on a relative basis. To our delight these sectors have also produced strong q1 reporting and this momentum is set to continue regardless of the current environment. These companies (ex. Nexus and Medios) can grow profitably also in a more challenging economic environment, because they are leading companies in quite small nische sectors, which enjoy structural growth of uncyclical nature. Usually our companies in addition still have quite small market shares in these sectors even though they are in a leading position in it and can thus very often outgrow the market.
To the portfolio structure which is built around companies which can quite rapidly progress profitably, also in a more subdued japan like economic environment, we are very pleased. To our unit holders we wish a sunny spring and good health.