Investor Information
Portfolio manager
Marcus Wahlberg (CIO)
Adam Lytle (PM)
inception
March 5, 2015
ISIN
SE0006852281
fund currency
SEK
target return
At least 12% net annual return on average, over rolling three-year periods.
Subscription
Monthly, documentation to be submitted no later than 5 banking days before the last banking day of the month. Minimum initial investment amount is SEK 50.000, thereafter additional investments of SEK 5.000.
redemption
Monthly, documentation to be submitted no later than 15 banking days before the last banking day of the month. Redeemed amount will be available on unitholders bank account no later than 5 banking days into the following month.
fees
1.50% annually, 1/12 debited monthly in arrears. Performance fee of 25% over the 5% hurdle, 1/12 debited monthly in arrears. Collective high watermark and no re-set applied.
regulator
Finansinspektionen
custodian
Skandinaviska Enskilda Banken AB (publ)
auditor
Daniel Algotsson, PricewaterhouseCoopers
fund administrator
ISEC Administration AB
risk management
ISEC Services AB
COMPLIANCE
Ann-Sophie Hesser, Apriori Advokatbyrå AB
management company
Elementa Management AB
Address: Mäster Samuelsgatan 1, SE-111 44 Stockholm
Telephone: +46 (0)8-660 02 25
Facsimile: +46 (0)8-124 505 91
E-mail: info(at)elementamanagement.se
Corp ID No.: 559026-1946
Year of incorporation: 2015
Registered office: Stockholm
Share capital: SEK 1.488.364
Investment strategy
Elementa is a research-driven absolute return fund with long-term investment horizon. The Fund use short selling and may also invest in corporate bonds. Understanding the business model and finding companies with sustainable competitive advantages as well as the ability to generate both cash flow and growth are important parameters for Elementa. Elementa is value oriented which means that the company valuation must be attractive in terms of its potential. Short positions are based on same high requirements as investments. Short positions are made with a long-term horizon in companies with weak market positions where the long-term trends are unfavourable. The primary focus of the Fund is Nordic small- and mid-sized companies, both for longs and shorts. The main objective of the Fund is to achieve maximum absolute return with a well-balanced risk taking regardless of the stock market development.
Companies pricing relative to its current earnings and growth potential is the main driver for an investment
Primary focus on small- and mid-sized companies, both longs and shorts
Long-term investment horizon for both longs and shorts
Focus on absolute return rather than hedging
Good ideas earn greater share of total assets
Possibility to invest in high-yield bonds with “equity like” return dynamics
Nordic focus – maximum of 25 % of NAV can be deployed outside the Nordics
“elementa is an absolute return fund with the goal to achieve maximum return over time regardless of the stock market development. management is research-driven with a focus on the Nordic countries. investments are made in small- and mid-sized companies, both long and short positions. the fund may also invest in high-yield bonds.”
The Fund is a special fund under the Alternative Investment Fund Managers Act (2013:561). The Fund may invest in transferable securities, money market instruments, derivatives, mutual funds (including ETF’s) as well as with credit institutions.
Sustainability
Elementa considers sustainability risks in investment decisions and sees these as a natural part of the fund manager's analysis work. The fund manager works according to the philosophy that companies that do not consider sustainability issues may develop worse over time. The fund manager may short such companies.
Elementa's sustainability work takes into account sustainability risks through exclusions of certain products and services, by not investing in companies whose operations we consider unethical, checks that companies have relevant ESG policies, and through dialogue with the companies we actually invest in. Elementa does not to consider the principal adverse impacts of investment decisions on sustainability factors. The reason for this is that in order to assess the principal adverse impacts of investment decisions on sustainability factors, the negative consequences arising from investments made in the fund must be transparent and calculable in a reliable manner. In order to achieve this, standardized relevant qualitative and quantitative data from the companies in question would be needed. As there is a lack of such data for Nordic small and medium-sized enterprises, Elementa has concluded that we cannot measure the principal adverse impacts of investment decisions on sustainability factors in a reliable or meaningful way.
Elementa has signed the United Nations Principles for Responsible Investment, UNPRI. The core of UNPRI's content is to consider responsible and ethical guidelines in investment decisions, to work for change through active ownership and to encourage reporting on ethical aspects of business operations.
More information about Elementa's sustainability work can be found in "ESG information" below.
Risk profile
The management of the Fund is research-driven. Consequently, a risk analysis is made during the process of finding longs and shorts. Elementa analyse risks in companies as well as in industries. The Fund is not controlled of a predetermined standard deviation level of which is not considered to be of greater importance for long-term investors.
The standard deviation may vary over time. However, the objective of the Fund is not to take higher risk, measured in standard deviation, than that of the stock market in general.
The Fund applies short selling. The main objective for each individual short is to deliver return on its own merits. This also has an effect on the portfolio as it has at least a partial protection against general declines in the market. From this perspective Elementa has the possibility to generate absolute return regardless of market direction.
The net exposure will normally vary between -30% - +50%, although exposure may be both lower or higher. Net exposure, expressed in percentage, is calculated as the Fund’s long minus short positions including derivatives exposure in relation to the Fund’s assets.
The Fund is exposed to liquidity risk which means that a position cannot be liquidated as intended in time to a reasonable price. The Fund will have positions in both liquid and illiquid securities, which potentially could lead to an increased risk for the Fund. When building the portfolio, liquidity related risks will be considered in order to ensure sufficient total liquidity. In addition, unitholders must announce redemption in good time (15 banking days before trade date) as additional protection.
Risk management is outsourced and performed independently from the portfolio management by ISEC Services AB. Skandinaviska Enskilda Banken AB (publ) is the Fund’s custodian.
Active risk
On January 1, 2020, new regulations regarding information requirements regarding the degree of activity in fund management entered into force, resulting in changes in the Swedish Financial Supervisory Authority's regulations (2013:10) on managers of alternative investment funds. The information should describe how the management of the fund is conducted and why any comparison index used is relevant, or why the choice not to have a comparison index has been made. The purpose is to improve the ability of investors to be able to determine whether the size of the annual fee charged by the fund manager for managing the fund is justified in relation to the activity level in the fund management reported.
The Elementa Fund is a so-called absolute return fund with the goal of generating a return of at least 12% per annum, after fees and costs, on average over rolling three-year periods. In addition to an in-depth company analysis, the Fund's active management also involves assessing the portfolio's exposure and composition in the form of long and short positions, respectively. This so-called net exposure means that the Fund's exposure to the market as a whole varies over time and which in turn is a natural part of active management. Therefore, having a comparative index should be put in relation to the type of fund. Due to the above, there is a risk of having a comparison index which can thus be misleading. As a result, there is no relevant benchmark index for Elementa. Consequently, it means that ordinary measures for measuring the level of activity in the fund management, such as active risk, cannot be calculated. Furthermore, it should be mentioned that the Fund Elementa has a return threshold calculated on the basis of 5% annual return. Further information can be found in Elementa's prospectus under the section Fees.
Independent valuation
Elementa Management AB has entered into agreement with AIFM Services AB regarding independent valuation services. The main reason is to increase and guarantee safety of the unitholders of the Fund by hiring a company with extensive experience in fund related services and valuation.
The contractor is under the supervision from the Swedish regulator Finansinspektionen and the valuation is handled seperately from the contractor’s other operations.
Fund administration
Elementa Management has entered into agreement with ISEC Administration AB regarding fund administration. The main reason is to increase and guarantee safety of the unitholders of the Fund by engaging a company with extensive experience with regards to fund administration. In addition, the assessment is that it is more cost-efficient outsourcing such services to a company with well-established infrastructure, rather than setting up and employing an equivalent structure. The contractor has numerous agreements with other fund management companies and consequently robust processes. ISEC Administration AB has also an extensive experience and well-established routines with the Fund’s depositary, Skandinaviska Enskilda Banken AB (publ).