Evli European Investment Grade
Long-term fixed income fund that invests in European corporate bonds with high credit ratings
| NAV 26.01.2023 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 85.617 | 2.55 | -12.32 | -3.91 | -1.63 | 3.02 |
| NAV 26.01.2023 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 190.735 | 2.55 | -12.32 | -3.91 | -1.63 | 3.02 |
| NAV 26.01.2023 |
Return % Year-To-Date |
Return % 1 y |
Return % p.a. 3 y |
Return % p.a. 5 y |
Return % p.a. Since start |
|---|---|---|---|---|---|
| 96.072 | 2.57 | -12.01 | -3.57 | -1.27 | -0.70 |
Risk
Morningstar
Recommended Investment Horizon
Administrative fees
Suitable for investors
- who wish to improve the returns of their fixed income investments with only a very moderate increase in the level of risk
- 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 European Investment Grade Fund is a long-term corporate bond fund that invests mainly in bonds denominated in euros and issued by companies. The investments are focused on bonds with higher credit ratings (Investment Grade), and the average rating is at least Baa3/BBB-. The fund may also invest in convertible bonds and other debt and debt-related instruments.
The portfolio is managed by
Jani Kurppa
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 Investment Grade are higher than those of a fund that invests solely in government bonds.
The fund may make use of the general outlook on the fixed income market by adjusting the effective duration of fixed income investments within the range of ± 3 years relative to the benchmark duration.
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 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
31.12.2022The ECB made an expected 0.50% rate hike in December. The hawkish message from the Central Bank was that they will have to do more hikes during 2023 than the market was expecting. The German 10yr government bond yield rose to +2.57%. There was not any panic in the corporate bond market and spreads tightened about 13 bps to governments. Historically, credit spreads are still trading at wide levels and all-in yield levels are getting more attractive.
The fund return in December was -1.45%, better than the benchmark return. The fund’s shorter duration and riskier bonds worked well. Direct negative exposure to higher energy prices is very small and the fund is focusing on low emission companies. Allocation to bank bonds was increased during H2 2022. The fund duration is 4.4 and yield 4.6%.
Fund facts
| Type of fund | European corporate bond fund (UCITS) |
|---|---|
| Investment activity began | 07.05.2001 |
| Benchmark index |
ICE BofAML EMU Non-Financial Corporate Index 80 %, ICE BofAML EMU Financial Corporate Index 20 % |
| Profit distribution | Fund-units are divided into A and B units. Profit share of at least 3% is distributed on A units annually. |
Sustainability-related disclosures
Financial product’s sustainability information in accordance with EU Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 (sustainability‐related disclosures in the financial services sector). This is a financial product in accordance with Article 8 of the SFDR.
Publication date: December 1, 2022
Legal Entity Identifier: 743700F3A5XZYGPNOK49
a) Summary
Read the summary in NL, ET, FR, DE, IT, LV, LT, NO, PT, ES
This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.
Environmental and social characteristics are promoted by observing Evli’s Principles for Responsible Investment, Climate Change Principles and climate targets, and by requiring that target companies observe good governance practices. The fund excludes harmful industries on the basis of Evli’s responsibility principles and Climate Change Principles. In addition, target companies are monitored regularly to ensure they have not violated the norms of specific international treaties and principles.
The fund promotes climate change mitigation in accordance with Evli’s climate targets: the fund’s carbon footprint and emission indicators are measured and monitored, and a regular scenario analysis is conducted to monitor the attainment of Evli’s general climate targets. Evli’s goal is to achieve carbon neutrality by 2050 at the latest, and it has set an interim target of a 50 percent reduction in indirect emissions from all investments by 2030, provided that this is possible in the investment environment. The comparison year is 2019. The fund-specific share of the emission reduction target may vary between funds.
Investment targets are monitored regularly, and efforts are made to engage with companies to influence their practices. Evli can engage with companies either independently or together with other investors. The themes of Evli’s engagement are climate change mitigation, respect for human rights, anti-corruption measures, taking environmental issues into consideration, factors related to good governance and the reporting of responsibility factors. Evli’s Responsible Investment Policy and Corporate Governance Principles set the framework for Evli’s engagement and conduct in the event of perceived breaches of the Code.
The fund’s target companies are analyzed before an investment decision is made and at regular intervals during the investment period with regard to environmental, social and corporate governance matters, or ESG factors. ESG factors are integrated into the analysis of target companies and their selection for investment by the fund. Evli has built an internal ESG database based on data produced by external service providers, which it uses to monitor ESG factors.
The achievement of the environmental or social characteristics promoted by the financial product is monitored and reported through the target companies’ carbon intensity trend and commitment to emission reduction targets, as well as through the number of target companies that have not committed serious norm violations.
Sustainability indicators are monitored through Evli’s internal ESG database. The data is based on data provided by external service providers, which is not verified by a third party. The completeness of the data is reported in conjunction with the sustainability indicators. All active investments of the fund promote environmental and social characteristics by observing Evli’s Principles for Responsible Investment and Climate Change Principles, and completeness of data has no impact on observance of the above-mentioned principles.
The fund’s benchmark index is a money market-based index that does not consider sustainability factors. The benchmark index used by the fund can be found in the fund-specific key investor information document.
b) No sustainable investment objective
This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.
c) Environmental or social characteristics of the financial product
In addition to other characteristics, the fund promotes environmental and social characteristics by observing Evli’s Principles for Responsible Investment, Climate Change Principles and climate targets, and requires that target companies observe good governance practices. The fund excludes harmful industries on the basis of Evli’s responsibility principles and Climate Change Principles. In addition, target companies are regularly monitored for violations of norms.
The fund promotes climate change mitigation in accordance with Evli’s climate targets: the fund’s carbon footprint and emission indicators are measured and monitored, and a regular scenario analysis is conducted to monitor the attainment of Evli’s general climate targets. Evli’s goal is to achieve carbon neutrality by 2050 at the latest, and it has set an interim target of a 50 percent reduction in indirect emissions from all investments by 2030, provided that this is possible in the investment environment. The comparison year is 2019. The fund-specific share of the emission reduction target may vary between funds.
Investment targets are monitored regularly, and efforts are made to engage with companies to influence their practices. Evli can engage with companies either independently or together with other investors. The themes of Evli’s engagement are climate change mitigation, respect for human rights, anti-corruption measures, taking environmental issues into consideration, factors related to good governance and the reporting of responsibility factors.
d) Investment strategy
The fund’s target companies are analyzed before an investment decision is made and at regular intervals during the investment period with regard to environmental, social and corporate governance matters, or ESG factors. ESG factors are integrated into the analysis of target companies and their selection for investment by the fund. Evli has built an internal ESG database based on data produced by external service providers, which it uses to monitor ESG factors.
The attainment of the climate targets will be measured using data from external service providers to monitor the fund’s carbon footprint and intensity, the degree of low-carbon transition, a scenario analysis in relation to the target of limiting global warming to 1.5 degrees Celsius and the warming ratio associated with the fund.
An assessment of the quality of corporate governance is an important part of the assessment of potential investments. Good governance refers in particular to effective management structures, employee relations, staff remuneration and tax compliance.
Evli’s ownership control principles state that the companies it invests in must engage in good governance by complying with the Finnish Corporate Governance Code issued by the Securities Market Association, for example, or corresponding foreign guidelines, which often impose a partial framework on the remuneration models of the invested companies. In addition, Evli’s Responsible Investment Team analyzes the fund’s investments every three months for any breaches of norms (UN Global Compact and OECD’s guidelines for multinational companies). The OECD’s guidelines for multinational companies also cover disputes related to taxation. Consequently, such disputes may lead to the exclusion of an investment instrument.
e) Proportions of investments
All active investments of the fund promote environmental and social characteristics.
f) Monitoring of environmental or social characteristics
The achievement of the environmental or social characteristics promoted by the financial product is monitored through the target companies’ carbon intensity trend and commitment to emission reduction targets, as well as through the number of target companies that have not committed serious norm violations. Evli has built an internal ESG database to monitor sustainability indicators. In addition, the Responsible Investment Team analyzes norm violation cases in accordance with the process set out in the Principles for Responsible Investment.
g) Methods concerning environmental or social characteristics
The environmental and social characteristics promoted by the financial product are monitored and reported using the sustainability indicators mentioned above.
h) Data sources and data processing
Evli has built an internal database based on data provided by external service providers, which is used for monitoring and reporting sustainability indicators and adverse impacts of investment decisions related to the promotion of the promoted environmental and social characteristics. The data from external providers is not verified by a third party and the completeness of the data is reported at the same time.
i) Limitations of methods and data
The achievement of the promoted environmental and social characteristics is reported annually through the sustainability indicators mentioned above, in conjunction with which the completeness of the data from the target companies is also reported. All active investments of the fund promote environmental and social characteristics by observing Evli’s Principles for Responsible Investment and Climate Change Principles. The completeness of the data does not affect compliance with the above principles.
j) Due diligence
The fund’s target companies are analyzed before an investment decision is made and at regular intervals during the investment period with regard to environmental, social and corporate governance matters, or ESG factors. ESG factors are integrated into the analysis of target companies and their selection for investment by the fund. Evli has built an internal ESG database based on data produced by external service providers, which it uses to monitor ESG factors. Evli regularly monitors its active investments and seeks to influence the companies’ practices. If a company violates the principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises or Evli’s Climate Change Principles, Evli will either seek to influence the company’s actions through engaging with it or exclude it from its investments. The methods are based on data provided by an external service provider, which is not verified by a third party.
k) Engagement policies
The financial product can be used to engage with the target companies as part of the promotion of environmental and social characteristics. Evli’s Responsible Investment Policy and Corporate Governance Principles set the framework for Evli’s engagement and conduct in the event of perceived breaches of the Code.
l) Designated reference value
The fund’s benchmark index is a money market-based index that does not consider sustainability factors. The benchmark index used by the fund can be found in the fund-specific key investor information document.