LHV World Equities Fund

In April, equity markets moved sideways. The share of the fund fell by 0.7% in the month. The negative contribution is largely from investments related to mineral resources. Among the funds larger equity holdings, we saw declines in commodity related names and industrials due to general fears of a recession. Copper miner Freeport McMorans share price fell 8%. Oil service company Valaris fell 9%. Shares of copper mining companies offer a free cash flow yield of nearly 20%. The sector is cheap and well positioned in the long term to benefit from the growing electrification trend. The energy sector has underinvested in increasing supply volumes for years, and this should be reflected in rising energy prices again in a more active economic environment. Energy sector shares offer 10%+ free cash flow yields. At these prices, the fund is ready to increase the equity positions of companies in various value chains related to mineral resources. Currently, share positions related to energy and industrial metals make up a total of 27% of the funds portfolio. In April, shares of gold mining companies made a positive contribution to the value of the unit, supported by the price of gold, which in dollar terms rose to the peaks of recent years. We expect the price of gold to move up in the long term if savers are unable to earn returns that exceed inflation through savings or more conservative investing. Stock investments related to gold and silver make up 11% of the funds portfolio. In the economy, we see a decelerating but still uncomfortably high inflation environment, forcing central banks to raise base rates. Over the past year, stock markets have been searching for a new equilibrium point in an environment with higher interest rates, and we believe that stock markets will continue to move without a major upward trend. In the changed market environment, we expect good returns from investments related to natural resources and high-quality individual Nordic stocks with strong pricing power.