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Market update 19 March: ECB launch bond-buying programme to combat market turmoil

  • Long-term interest rates rose everywhere, even in so-called safe havens. The US 10-year interest rate rose by 11 bps and the German equivalent by 20 bps with the latter now at a similar level to the beginning of the year, which is highly unusual in a period of distress.
  • This is a sign that investors need cash and are selling the most liquid assets in their portfolios to meet margin calls or redemptions. It could also be a signal that investors are starting to discount the higher Government debt as a result of the massive fiscal stimulus we have seen rolled out globally.
  • We saw extreme movements in FX markets with significant NOK depreciation to record lows of NOK 11.87 / USD.
  • The ECB held a second emergency meeting and launched a EUR 750 billion bond-buying program to try and restore market confidence and stability. The central bank will purchase government and corporate debt (including non-financial). This comes in addition to the existing QE program, and the ECB will now buy more than EUR 1 trillion in the next nine months. European bond markets are reacting positively to this.

SKAGEN Funds Summary

  • The portfolio managers continue to position the funds for any rebound, while protecting them against any further drawdown.
  • They are monitoring a lot of attractive stocks with strong balance sheets which have become cheap in the current bear market.
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Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager's skill, the fund's risk profile and management fees. The return may become negative as a result of negative price developments.