Evli Corporate Bond
Long-term fixed income fund that invests in European corporate bonds with both low and high credit ratings
| NAV 02.07.2020 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 110.532 | -2.15 | -1.04 | 0.94 | 2.22 | 4.54 |
| NAV 02.07.2020 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 252.108 | -2.15 | -1.04 | 0.94 | 2.22 | 4.54 |
| NAV 02.07.2020 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 95.362 | -1.95 | -0.64 | 1.35 | - | -1.69 |
| NAV 02.07.2020 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 104.349 | -1.95 | -0.64 | 1.35 | - | 1.38 |
Risk
Morningstar
Recommended Investment Horizon
Administrative fees
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 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 and extraction).
The portfolio is managed by
Mikael Lundström
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
31.05.2020The corporate bond market continued its strong recovery in May. More and more economies started to open up and the strong fiscal and monetary stimulus boosted corporate bonds. Investment grade bond spreads tightened by 17 basis points, but are still clearly wider than normal, whereas High Yield spreads tightened by 67 bps.
The fund return in May was positive +0.96 % as a result of tighter spreads. The return was higher than the benchmark return helped by strong performance from our investment grade bonds. During the month we participated in a lot of new issuance in both Investment Grade and High Yield. During the crisis, we first reduced risk in February / March, but have gradually increased it in April and May by buying mostly longer dated Investment Grade bonds. The portfolio is in such a shape that we are confident going into the next three to six months, which will be the most crucial for companies. Our exposure to most effected sectors is low and credit selection has been conservative. We believe a portfolio consisting of mostly strong BBBs and BBs are best suited for this environment.
The funds YTM is 2.73% and modified duration 4.43.
Fund facts
| Type of fund | European corporate bond fund (UCITS) |
|---|---|
| Investment activity began | 14.09.1999 |
| 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. |