December: cyber security rally benefited the fund

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The Global Security Fund increased by 4.72 per cent (S-share class) and 4.52 per cent (R-share class) respectively in December, which was significantly better than the benchmark index MSCI World TR, which rose by 0.05 per cent.

News of a cyber attack on the network monitoring program "Orion" from Solarwinds Corp affected the market during the month. The share prices of companies in cybersecurity rushed away. The incident is likely to have consequences for an industry that was a clear winner during the COVID19 pandemic. This is in the wake of increased budgets for security solutions. With over 320,000 customers in over 190 countries, the event affected both the private and public sectors, however, there is no official statement on the cost of the event.

FireEye, a cybersecurity company in which the fund re-established a position in October, was the best-performing stock of the month. The company increased by more than 53.4 percent in December when it became known that the company was the first to report on the Orion infringement. FireEye is one of the few companies in cybersecurity solutions with sales revenue approaching $ 1 billion. Slow sales growth in recent years, however, has meant that the company's share price has stood still. However, new acquisitions can help FireEye return to more attractive sales growth and profitability. For example, in November Respond Software was acquired, which increases the company's ability to deliver eXtended Detection and Response (XDR) capacity. FireEye's phenomenal share price rise in December contributed 1.7 percentage points to the fund.

Crowdstrike was once again one of the fund's best-performing stocks and the stock that contributed the most to the fund, after the company delivered a quarterly report that beat expectations. Free cash flow was much better than expected and showed the long-term potential of the business model to provide profitable growth. Crowdstrike continues to have a tailwind from an increased need for security changes. It is noteworthy that about 20 percent of all servers they protect are in the public cloud with significant room for expansion. The share rose by more than 38 percent during the month and helped contribute 2.4 percent to the fund.

Fortinet, a cyber security company with a focus on network solutions, benefited from interest in the security industry during the month of December and the share price soared by more than 20.5 percent, which benefited the fund by 0.55 percentage points. The company announced during the month that it has acquired the SaaS company Panopta, which will enable Fortinet to offer customers more visibility in an increasingly complex tech stack. Palo Alto Networks, another cyber company focusing on network solutions, was up 20.9 percent during the month, benefiting the fund by more than 0.46 percentage points.

Mantech International is one of the US "Department of Defense" largest IT provider and reported several lucrative deals during the month that included the US Homeland Security and Defense Agency. The company is likely to benefit from the likely increasing rate of investment in security solutions within the US military. The company announced during the month that it had completed the acquisition of Tapestry Technologies, which will improve capacity in cyber architecture, policy development, software engineering and cyber education. The company was up just over 16 percent for the month, which benefited the fund by 0.5 percentage points.

The more traditional security companies had a weak development during December. These companies also work with cyber security solutions, but investor focus has ended up on the companies' subdued expectations in the coming years. Lockheed Martin was the month's worst performing company and was down 2.75 percent. This, together with a weak dollar / strong krona, had a negative effect on the fund by 0.5 percentage points. L3 Harris Technologies fell by 1.55 percent, which had a negative effect on the fund by 0.4 percentage points. Raytheon Technologies' share price was down just under 0.3 per cent, which had a negative effect on the fund by just over 0.3 percentage points. Booz Allen Hamilton was up 0.45 percent while Northrop Grumman was up 0.8 percent.

The Swedish krona was just over 4 per cent stronger against the dollar during the month, and just over 12 per cent stronger for the whole of 2020. This has of course meant a headwind for the fund's return, but with a broad negative sentiment for the dollar right now, there are good prospects for the dollar's development in 2021 .

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