Evli European High Yield

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

NAV
18.09.2019
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
145.560 6.85 2.55 3.88 4.07 6.03
NAV
18.09.2019
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
295.914 6.85 2.55 3.88 4.07 6.03
NAV
18.09.2019
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
110.073 7.19 3.01 - - -

Risk

3/7

Morningstar

4/5

Recommended Investment Horizon

4 years or more

Administrative fees

0.95 % p.a.

Suitable for investors

  • who wish to improve the returns of their fixed income investments
  • who wish to make their bond portfolio better diversified
  • who wish to benefit from Evli’s experience in European corporate bond markets.

Invest

min. 1 000 € or 50 €/month

Evli European High Yield Fund is a long-term corporate bond fund that invests mainly in euro-denominated bonds issued by European companies and banks.

The investments will be focused on lower-credit-rated (high yield) bonds. The investments' credit rating will be on average BB+ or lower. Moreover, a maximum of 20% of the fund's assets may be invested in investments with no official credit rating.

 

The portfolio is managed by

Mikael Lundstrom

Mikael Lundström

Investment Objective and Risks

The aim is to earn a return that, in the long term, exceeds the return of the benchmark index. The expected return and level of risk of Evli European High Yield are higher than those of a fund that invests solely in government bonds or Investment Grade corporate bonds.

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. The fund’s investments carry a substantial credit risk. As the credit risk grows, the values of the bonds in the portfolio decrease and vice versa.

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). The fund’s sensitivity to interest rates is greater than that of money market funds, but correspondingly smaller than that of fixed income funds that invest solely in government bonds.

Monthly review

31.08.2019

Market expectations for ECB’s September meeting are growing. Central bank is expected to lower rates and possibly restart their bond buying program. Global macro worries continue still, and rates are coming down. German 10yr government bond yield ended negative -0.70% at the end of the month. High Yield spreads tightened by 11 bps.

The fund’s monthly return was +0.21% and +0.73% for the index. Our overweight in Bs and unrated did not perform as well as the BBs, and partly explains the underperformance. Also, our credit selection did not really work as well in August. During the month we reduced some cyclical positions in the fund. The market is expecting the central bank to start buying corporate bonds again. We believe this will play out as last time, i.e. first the bonds that the central bank buys tighten and then other credit that has lagged the first rally will start to tighten. The fund’s holdings are well positioned for that, and we believe that the fund return will be good also during next 12 months.

The fund’s yield at the end of August was 4.51% and the modified duration 3.11.

Fund facts

Type of fund European corporate bond fund (UCITS)
Investment activity began 14.03.2001
Benchmark index

ICE BofAML European Currency Developed Markets High Yield Constrained 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 € or 50 €/month