LHV World Equities Fund

In May, the equity investments in the fund continued to rise. The positive contribution came from commodity related companies, which was backed by the rise in copper and gold prices to new highs. Returns were also supported by gains in equity positions from the Nordic stock exchanges. Energy sector investments had mixed results. Fund unit value increased 4.7%. Fund’s largest investments remain in equities related to commodities. We see here good inflation protection, which is cheaply priced. Large commodity sector companies are valued cheaply against earned profits. Another major place from where we have chosen individual investments is Finnish, Swedish, Danish and Norwegian stock exchange companies. Here too, we have preferred companies related to commodity markets. In May, we visited three Finnish stock exchange companies to better map the opportunities and risks associated with individual investments. The companies visited were Metso, UPM, and Kojamo. Metso is also the largest position among Nordic companies in the fund. We see that the stock market undervalues the improvement in the stability of Metsos business model. The company’s market cap is 9 billion euros, and the stock trades at a 7.5% free cash flow yield. For us, the Nordic stock exchange is a home market where there are well-managed companies with a long history. One of the key strengths of the Nordics is the cheap energy coming from CO2-free nuclear and hydro power, which gives many of the regions industrial companies a significant advantage over Western European companies in the green transition. In recent years, the price of electricity in the Nordics has remained about 50% cheaper than in the Baltics and Western Europe. This is a huge advantage that the industry can utilize. Fund’s largest equity positions from the Nordics are mining equipment manufacturers Metso, Finnish forestry industry Stora Enso and Swedish industrial company Trelleborg.