Evli Corporate Bond

Long-term fixed income fund that invests in European corporate bonds with both low and high credit ratings

NAV
12.09.2019
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
116.263 5.91 3.58 2.75 2.68 4.83
NAV
12.09.2019
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
257.201 5.91 3.58 2.75 2.68 4.83
NAV
12.09.2019
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
106.114 6.21 4.00 - - -

Risk

2/7

Morningstar

4/5

Recommended Investment Horizon

3 years or more

Administrative fees

0.85 % p.a.

Suitable for investors

  • who wish to diversify their investments into corporate bond markets with returns higher than those of government bonds
  • who seek professional and comprehensive asset management services.

Invest

min. 1 000 € or 50 €/month

Evli Corporate Bond Fund is a long-term corporate bond fund that invests mainly in euro-denominated bonds issued by European companies. Assets of the fund may also be invested in bonds issued by member states of the OECD or by non-European companies whose domicile is in a member state of the OECD. Investments are made in bonds with both higher (Investment Grade) and lower (High Yield) credit ratings, and the average credit rating of the bonds is at least BBB- or an equivalent rating of the same risk level. Under neutral market conditions, the aim is to invest 75% of the assets in Investment Grade bonds and 25% of the assets in High Yield bonds. If the fund invests in other than euro-denominated corporate bonds, currency derivatives are used to hedge against currency risk.

 

The portfolio is managed by

Mikael Lundstrom

Mikael Lundström

Jani Kurppa

Jani Kurppa

Investment Objective and Risks

The aim is to achieve a return that, in the long term, exceeds the benchmark return. The expected return and risk of Evli Corporate Bond are higher than those of a fund that invests solely in government bonds.

The average remaining exercise period (duration) of the fund's fixed income investments may be ± 3 years compared to the interest rate risk of the benchmark index.

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. Poorer 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

31.08.2019

Market expectations for ECB’s September meeting are growing. Central bank is expected to lower rates and possibly restart their bond buying program. Global macro worries continue still, and rates are coming down. German 10yr government bond yield ended negative -0.70% at the end of the month. Investment grade spreads widened by 8bps whereas High Yield spreads tightened by 11 bps.

The fund’s monthly return was +0.6% as yield declined significantly. The benchmark return was a tad higher due to higher duration. The fund’s duration is 4.1 but with a significantly higher yield, 1.7%, compared to benchmark. We believe a possible bond buying program will support the market and especially the so-called crossover bonds (BBB to BB rated). These bonds have a clear spread pick-up but are much more safe than lower rated High Yield bonds. The majority of the fund’s holdings are these kinds of bonds.

Fund facts

Type of fund European corporate bond fund (UCITS)
Investment activity began 15.09.1999
Benchmark index

ICE BofAML EMU Corporate Index 75%, ICE BofAML Euro High Yield BB-B Rated Constrained Index 25 %.

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 € or 50 €/month