Evli Corporate Bond

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

NAV
20.01.2022
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
111.687 -0.66 -0.84 2.44 1.88 4.41
NAV
20.01.2022
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
262.656 -0.66 -0.84 2.44 1.88 4.41
NAV
20.01.2022
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
96.957 -0.64 -0.45 2.85 - 1.42
NAV
20.01.2022
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
109.392 -0.64 -0.45 2.85 - 1.94

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 and consideration of sustainability factors 

SFDR classification*: article 8, light green 

The fund promotes sustainability factors as part of investment operations by integrating responsibility factors into investment analyses and by engaging with and excluding companies. Before an investment decision, the ESG analysis focuses on matters that are quantifiable through the quality of a corporate bond. Especially in company analysis, the fund focuses on the main ESG risks of each company. If a company has significant and unresolved ESG issues, the company becomes ineligible for investment. The analysis of ESG factors is based on portfolio managers’ holistic view of the company, which is based on information provided by the company, the portfolio managers’ own analysis and MSCI’s ESG data. The fund’s favor companies with better ESG scores in their investments, i.e. the fund uses 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 their investments. The companies invested in by the fund are monitored for violations of UN Global Compact standards and the Climate Change Principles, and they are engaged with or excluded if violations are detected. The ESG indicators of the fund are reported in fund-specific ESG reports, which are updated four times a year. The fund’s benchmark index is a market-based index that does not consider sustainability risks or sustainability factors. The benchmark index used by the fund can be found in the fund-specific key investor information document.

*In accordance with the Sustainable Finance Disclosure Regulation (SFDR), Evli’s funds are classified into three categories with respect to sustainability factors: mainstream funds do not address sustainability factors, light green funds promote sustainability factors among other features, and dark green funds aim to make sustainable investments
 

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

31.12.2021
December was a good month for the markets. The Omicron variant turned out to be milder than previous variants, which boosted sentiment. On the central bank front, the Fed announced larger than expected tapering and potentially more rate hikes than previously thought due to higher inflation and a strong economy. Stock markets rose significantly in December, 10-year government bond yields rose 17 bps, Investment Grade spread tightened 13 bps and High Yield a massive 38 bps.
 
The fund return in December of 0.33% was clearly better than the index (0.11%). For the whole year, the fund return was 0.11% versus the index return of -0.07%. Our shorter dated bonds and overweight in High Yield and unrated worked well both in December and for 2021 as a whole. We keep the same position, as we believe there is a clear risk for higher yields in 2022 if inflation turns out to be even slightly more persistent than the market is pricing in now. In that case, our short dated crossover bonds (BBB-BB rated) should perform well. We also believe that the Omicron variant will fade away rather quickly, which should boost our airline bonds.
 
The fund’s YTM is 1.98% and modified duration 4.22.

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