Evli Nordic Corporate Bond

Long-term fixed income fund that invests in Nordic corporate bonds

NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
86.677 -1.10 -0.92 0.69 1.88 2.61
NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
141.656 -1.10 -0.92 0.69 1.88 2.61
NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
100.666 -0.82 -0.57 1.04 2.23 2.97
NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
148.614 -0.82 -0.57 1.04 2.23 2.97

Risk

3/7

Morningstar

3/5

Recommended Investment Horizon

3 years or more

Administrative fees

0.75 % p.a.

 

 


Suitable for investors

  • who want to benefit from the competitive performance of the Nordic corporate bond market
  • who prefer a stable Nordic political and economic operating environment
  • who want to benefit from Evli’s expertise in Nordic corporate bonds
  • who want to invest responsibly and take into account not only economic analysis but also environmental, social and good governance (ESG) factors.

Invest

min. 1 000 €

Investment Policy

Evli Nordic Corporate Bond Fund is a long-term corporate bond fund that mainly invests in bonds issued by Nordic companies, financial institutions and other organizations. The investments are made in rated investment grade and high yield bonds and unrated corporate bonds. The fund may also invest in derivatives contracts both for hedging purposes and as part of its investment strategy.

The fund’s investment policy complies with Evli’s policies for responsible investment. The fund excludes from its investments in addition to companies manufacturing controversial weapons and tobacco, companies manufacturing alcohol, gambling, adult entertainment, weapons and fossil fuels (mining, extraction and refining). 

Responsibility

ESG factors are integrated into the fund’s investment decisions, and the aim is to select companies with a high ESG score, that is, the fund uses so-called positive selection. In addition to Evli's general exclusion practices, the fund excludes alcohol and weapons manufacturers, gambling companies and fossil fuel mining, extracting, drilling and refining companies from its investments. The fund’s investments are monitored for violations of UN Global Compact norms and the Climate Change Principles, and the fund engages with the companies they invest in or exclude them if violations are detected. The ESG indicators of the fund is reported in fund-specific ESG report, which is updated four times a year.

 

The portfolio is managed by

Jani Kurppa

Jani Kurppa

Investment Objective and Risks

The fund’s goal is to out-perform the benchmark index over the long term. The return expectation and risk of funds investing in corporate bonds are generally higher than the return expectation and risk of funds that invest solely in government bonds.

The fund does not require its investments to be credit-rated, which means that the fund's investments are subject to an average or high credit risk. The credit risk arising from individual issuers is reduced by diversifying the investments among various issuers.

The fund’s investments carry a credit risk

Credit risk originates from a bond issuer’s ability to repay the bond’s coupons and capital on the maturity date. In the fund’s investments, the default risk arising from an individual issuer is reduced by diversifying the investments among various issuers. The risk premium (credit margin) required by investors varies during the bonds’ exercise period according to the market conditions and factors related to individual issuers.

As the credit risk grows, the values of the bonds in the portfolio decrease and vice versa. Lower credit-rated High Yield bonds, in particular, carry a significant credit risk.

The fund’s value is affected by interest rate risk

A decrease in interest rates raises the value of the fund, while an increase reduces the value of the fund. Interest rate risk may be measured with the average remaining exercise period (duration). Interest rate risk indicates how sensitive the value of the fund is to changes in interest rates. Long-term fixed income funds are much more sensitive to interest rate movements than money market funds. The value of the fund may fluctuate heavily if there are substantial changes in interest rates.

Monthly review

30.09.2020

The corporate bond market saw some volatility when sentiment got softer especially in rated high yield bonds. There has been a lot less new supply into the market which has led to highly oversubscribed new issues. Nordic bond prices have not rallied at the same pace as similar European credits. As a result, relative value in the Nordics is now at a better level than before the crisis. Early economic signs indicate that Nordic economies will manage the crisis well from a relative perspective. The Swedish central bank started to buy corporate bonds in September and that should support the Swedish SEK-market. All Nordic central banks or governments have announced buying corporate bonds from the secondary and primary markets. Also, all countries have started many direct programs to support companies. Portfolio companies have reported better than expected Q2 results.

The fund's return in September was +0.29% due to recovery in pricing, although there was a softer market development near the end of the quarter. The fund has sold names that we think will have more severe effects from the virus measures. We have decreased exposure in names related to travel, retail and companies with indirect oil sensitivity. Exposure to these sectors was small even at the start of the crisis. We have also sold short maturity bonds and bought similar companies with longer maturity bonds as the longer ones are trading at much lower prices now. This ensures that the fund recovery potential remains high. We will continue to focus on good quality companies, which can also withstand negative cycles. There were inflows near the month end that led to a bit elevated cash position. The fund’s yield level including cash was 1.86% after currency hedging. Duration was 2.4 years. 

Fund facts

Type of fund Nordic corporate bond fund (UCITS)
Investment activity began 16.04.2007
Current strategy since 31.08.2017
Benchmark index

ICE BofAML 1-5 Year Euro Corporate Index

Profit distribution Fund-units are divided into A and B units. Profit share of at least 3% is distributed on A units annually.

Downloadable files

Invest

min. 1 000 €