LHV World Equities Fund

In the latter part of the summer our positions were mostly affected by the trade dispute between the US and China, which has a direct but limited impact to our investments. In August, fund lost 1.4% of its value. During the month we continued to invest in value stocks that have been sold to unreasonably low levels due to macroeconomic risks. We find Scandinavian stock markets to be attractive places where to pick high quality single stocks with 4-5% dividend yield. In the fear of cyclical risks, many strong enterprises have been sold below their fair value. In August we increased the share of Finnish foresting positions which are well exposed to the long term trend towards recyclable materials. The fund has invested in Stora Enso, UPM Kymmene, Metsa Board, Valmet and Ponssee stocks which are all positioned in different parts in the value chain. In total, approximately fifth of funds’ assets are invested in Finnish stock market. We are actively looking for investment opportunities from Swedish and Danish market, in which we have met with several companies over the last months. We have invested in one of the Scandinavian leading confectionary producer from Sweden – Cloetta with a less cyclical business model compared to Finnish industrial enterprises. From Danish market we like kitchen furniture producer TCM Group which is aggressively gaining market share and has free cash flow yield around 10%. Mentioned companies are fairly small in size but we believe for that reason they have been overseen by many investors and therefore, they are way less overcrowded than several bigger companies that are trading at high price levels. In total we are holding 25 different investments with an average dividend yield of 4%. In September we took advantage of the selling pressure and reduced the cash levels from 25% to 16%.