SKANDIA GLOBAL FUNDS PLC - Fidelity Investments

Skandia Global Funds plc
Annual Report and Audited Financial Statements for the year ended 31 December 2011
SKANDIA SWEDISH GROWTH FUND
INVESTMENT ADVISER’S REPORT FOR THE YEAR ENDED 31 December 2011 (continued)
Skandia Swedish Growth Fund – Lannebo Fonder AB
Below is a report from the Investment Adviser of the Skandia Swedish Growth Fund for 2011.
The Skandia Swedish Growth Fund was launched on 3 June 2002 with a starting Net Asset Value per share of SEK 10.00.
Investment Adviser’s Commentary
The Skandia Swedish Growth Fund underperformed its benchmark, the SIXPRX Index, for 2011. The fund returned -15.07%, while
the benchmark index recorded a total return of -13.60% over the period.*
During the first quarter, the main reason for the lag was the weak performance of the capital goods shares, where the fund had large
overweight positions. Fourth quarter results, which were reported during the first quarter, were weaker than expected mainly due to a
negative impact on margins from higher raw material prices. Furthermore, the strong Swedish Krona had a negative impact on
earnings in the capital goods sector.
Meanwhile, the Swedish state sold part of their holding in Nordea, which exerted pressure on this stock. As Nordea is one of the
largest overweight positions in the fund, it had a large negative impact on relative performance.
On the positive side, the strong performance of the Swedbank shares, where the fund had a large overweight, to some extent
compensated for the weak performance of the capital goods sector and the Nordea shares. Stock picks in Investor, Ericsson, Getinge
and in particular MTG had a positive impact on the relative performance of the fund.
While this kind of underperformance can happen when managing a fairly concentrated portfolio, the Investment Adviser is still
disappointed by the weak performance of the capital goods and Nordea shares.
During the second quarter, the main drag on performance came from capital goods shares, where the fund had large overweight
positions. Weaker macroeconomic statistics increased concerns regarding the business cycle. Furthermore, the strong Swedish Krona
had a negative impact on earnings in the sector.
On the positive side, the strong performance of more stable shares such as Getinge, AstraZeneca and Swedish Match, where the fund
held large overweight positions, to some extent compensated for the weak performance of the capital goods sector. Moreover, the
overweight in Ericsson had a positive impact on the fund‟s relative performance.
The Skandia Swedish Growth Fund outperformed its primary benchmark, the SIXPRX Index, over the third quarter of 2011. The fund
produced a total net return of -19.56%, while the benchmark index had a return of -19.80% for the period.* On the positive side, the
strong performance of more stable shares such as TeliaSonera, Tele2, AstraZeneca and Swedish Match, where the fund had large
overweight positions, to some extent compensated for the weak performance of the capital goods sector. Capital goods shares
detracted where the fund had over weight positions. Weaker macro economic statistics increased concerns regarding the business
cycle, which had a negative impact on capital goods shares.
During the fourth quarter the fund gained in real terms and performed nearly in line with the benchmark. Fund holdings in a number
of defensive stocks were a major beneficial factor in its performance. Among the better performers were SCA, Elekta, Getinge and
Swedish Match. Holdings in some quality cyclical shares, such as SSAB and JM, also benefited the fund. However an underweight in
Lundin Petroleum, which significantly outperformed the market detracted from the fund‟s returns. Assa Abloy was another holding
that hurt performance.
At the sector level, overweights in construction and healthcare plus an underweight in real estate benefited, but an overweight in
banks and underweight in utilities (LundinPetroleum) detracted.
Source: Lannebo Fonder AB as at 31 December 2011.
* Performance figures refer to Class A1 shares and are sourced from Morningstar. Calculation basis: bid to bid, net of fees, gross
income reinvested in fund base currency (Swedish Krona).
References to benchmarks are for illustrative purposes only and are not intended to imply a performance objective. There is no
guarantee that the Skandia Swedish Growth Fund will outperform this benchmark.
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