Evli Corporate Bond

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

NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
115.842 0.05 1.72 1.98 3.25 4.63
NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
264.219 0.05 1.72 1.98 3.25 4.63
NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
100.203 0.11 2.13 2.39 - 2.65
NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
109.647 0.11 2.13 2.39 - 2.47

Risk

3/7

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
  • 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 € or 50 €/month

Investment Policy 

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.

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.

Read more about Evli's responsible investing

 

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

31.01.2021

The Investment Grade market was in a sideways movement, while the High Yield market performed well in January. Limited supply in vaccines was pressuring the sentiment, but ECB buying remained steady. The German 10yr government bond yield rose to -0.52%. Investment Grade spreads remained unchanged and High Yield spreads tightened by 15 bps.

The fund return in January was 0.25%, which was clearly better than the index at 0.06%. In particular, selection in BBB and weight in non-rated bonds performed well. During the month, we bought new issues from Adler Group, Verisure and Ineos Quattro. The beginning for 2021 has been strong for credit markets and we still believe that spreads can continue tightening. Better economic growth, vaccinations and quantitative easing from the central banks all support the credit market. However, the market has come a long way, so the greatest potential is behind us. We believe there is the most potential in banking subordinated paper and crossover bonds. We are overweight in the fund in those.

The fund’s YTM is 1.74% and modified duration 4.45.

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.

Downloadable files

Invest

min. 1 000 € or 50 €/month