LHV World Equities Fund

In October, ahead of the US presidential election, we saw profit-taking in the funds investments in equity positions related to Nordic companies and commodities. There were no transactions in the fund during the month. The share of the fund fell by 2.9% in the month. November put an end to the US presidential elections, which were won by surprisingly wide margin by the US Republican candidate Donald Trump. The initial reaction of stock markets was positive in anticipation of a wave of lower taxes and deregulation following Trumps victory. In the bond markets, we saw a rise in long-term interest rates. Trumps economic policy message was to lower taxes, stand up for the interests of US industry by imposing tariffs on imported goods, ensure the availability of cheap energy and reduce all kinds of support programs for the green transition. Time will tell how these policies ultimately affect stock markets. For example, we remember how during the period of Trumps first term, there was a real boom in the stock markets in green assets, which Trump apparently did not favor. However, during Bidens tenure, where the green revolution was favored with large subsidies, the shares of the sector fell by approx. 70%. In the fund, we try to ensure that the portfolio includes generally good companies that, regardless of regulations and trade policy, are able to grow in their markets. The fund has invested heavily in shares of industrial companies in the Nordic countries, where we observe that companies such as Atlas Copco or Trelleborg own production sites in both the USA and China. Local production will help them better escape the trade war, benefiting from growth in both the US and China markets. 33% of the funds assets are invested in US listed companies that are largely related to commodities such as oil, gas and copper. However, it is important for commodities that confidence is also restored in the Chinese economy. In recent months, we have seen the unveiling of a number of government support plans in China to ease problems in the real estate sector and end the decline in stock markets. In light of even slightly improving growth outlook, Chinese stocks are cheap. The fund has invested 7% of its assets in shares of Chinese companies.