Evli Green Corporate Bond

Long-term fixed income fund that invests in European green corporate bonds

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
100.467 -0.80 - - - 0.47
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
100.467 -0.80 - - - 0.47
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
100.652 -0.74 - - - 0.65

Risk

3/7

Morningstar

0/5

Recommended Investment Horizon

3 years or more

Administrative fees

0.75 % p.a.

Suitable for investors

  • who wish to improve the returns of their fixed income investments with only a moderate increase in the level of risk
  • who wish through investing to support projects that are beneficial for the environment and promote the achievement of the sustainable development goals
  • who wish to benefit from Evli’s experience in European corporate bond markets
  • 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 Green Corporate Bond Fund is a long-term corporate bond fund that invests primarily in euro-denominated bonds issued by European companies and banks. 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 purpose is to invest in assets that, based on a sustainability analysis, are expected to have a positive impact on the environment or society or on the achievement of the UN Sustainable Development Goals. Such assets include, for example, green bonds.

The investments will be made in bonds with both higher (investment grade) and lower (high yield) credit ratings. The investments' credit rating will be on average at least BBB- or a classification with a corresponding risk level. Moreover, a maximum of 20% of the fund's assets may be invested in investments with no official credit rating.

Responsibility

The purpose of the fund is to invest in assets that, based on a sustainability analysis, are expected to have a positive impact on the environment or society or on the achievement of the UN Sustainable Development Goals. These assets include green bonds. In addition to Evli’s general exclusion practices, the fund excludes manufacturers of alcohol and weapons and gambling and fossil fuel mining, extracting and drilling companies from its investments. The fund's investments are monitored for violations of UN Global Compact norms and the Climate Change Principles, and the funds engage with the companies they invest in or exclude them if violations are detected. The fund's ESG indicators are reported in a fund-specific ESG report, which is updated four times a year. In addition, the fund publishes a regular (at least once a year) report on the use of assets and the expected impact of the projects it has funded.

Read more about Evli's responsible investing

 

The portfolio is managed by

Juhamatti Pukka

Juhamatti Pukka

Portfolio Manager

Noora Lakkonen

ESG Analyst

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 Green Corporate Bond are higher than those of a fund that invests solely in government bonds.

The credit risk arising from individual issuers is reduced by diversifying the investments among dozens of different issuers. The average repayment term (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 new year started strongly, continuing the strong tightening phase in short corporate bonds. Early January typically has dull primary market activity, resulting in increased secondary market demand – and this year was no exception. While the first half of the month was strong, the latter part offered a few clearly soft sessions driven by slower than expected vaccination rates and production hiccups in global covid-19 vaccination production.

The fund total return in January was -0.07%, beating the benchmark total return of -0.13%. By sector, the main drivers for outperformance were selection in Automotive, overweight in Transportation and underweight in Utilities. The green bond primary market was dull, and we only added DLR 2031 into the portfolio.

Markets are still strongly driven by central bank stimulus, negative rates and strongly recovering economies. The portfolio companies that have so far reported their 2020 results have broadly by far exceeded expectations and many companies have reported strongest ever Q4 results. We expect spread compression to continue thanks to strong technical support and improving fundamentals. In addition, we see the green theme to get even stronger in 2021 and, hence, the market is set to offer numerous new opportunities to support the growth of the more sustainable corporate bond market and greener economies.

Fund facts

Type of fund European corporate bond fund (UCITS)
Investment activity began 17.08.2020
Benchmark index

Bloomberg Barclays MSCI Euro Corporate Green Bond 5% Capped 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 €