Evli Green Corporate Bond

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

NAV
26.11.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
100.972 - - - - 0.97
NAV
26.11.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
100.972 - - - - 0.97
NAV
26.11.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
101.070 - - - - 1.07

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

31.10.2020

October started with a positive tone in the markets, but towards the middle of the month, equity markets started to wobble as a result of an intensifying second wave of Covid-19 in Europe. The credit market resisted the softness in equities surprisingly well in the beginning until the shield started to crack – especially in high yield – in late October. The green corporate bond market, however, remained bid only although spreads widened somewhat during the latter part of the month.

The fund returned 0.35% in October. The portfolio is still very much in the construction phase given the poor liquidity in the secondary market. As a result, we continue to take the advantage of the primary market efficiently. While the sentiment cooled and Q3 reporting season blackout periods started, the new issue market was substantially less active in October than in September. We added from the primary market new BFCM, Tornator, Arkema and BNP green bonds.

Demand for green corporate bonds has been very strong during the second half of the year and we expect an ever growing share of investors to add to their green bond allocation in the next 12 months. One major add to green bond demand would be if the ECB follows the QE critics’ lead and increases the green bond share of purchases. Also, issuers are increasingly interested about green bonds as a financing instrument and we anticipate the rest of the year will introduce many new issuers into the green bond market, further diversifying the sector allocation.

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 €