Evli Short Corporate Bond

Fixed income fund that invests in short-maturity corporate bonds in a diversified manner

NAV
31.07.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
15.207 -2.55 -2.27 -0.11 0.81 2.09
NAV
31.07.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
28.934 -2.55 -2.27 -0.11 0.81 2.40
NAV
31.07.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
101.749 -2.43 -2.08 0.09 - 0.49

Risk

2/7

Morningstar

5/5

Recommended Investment Horizon

2 years or more

Administrative fees

0.55 % p.a.

Suitable for investors

  • who wish to get a steady capital appreciation with low volatility
  • who wish to get a better return than the traditional money market funds or bank deposits can offer
  • who wish to get an actively managed and well diversified fixed income portfolio in a single product
  • who wish to invest their assets without high credit risk
  • who do not wish to tie-up their capital for a defined time period.

Invest

min. 1 000 €

Evli Short Corporate Bond Fund is a corporate bond fund that invests its assets primarily in euro-denominated bonds with a short and medium-term remaining duration issued by European companies and banks, and in other interest-bearing investments. The investments will be made in bonds with both higher (Investment Grade) and lower (High Yield) credit ratings. The fund generally hedges the currency risk associated with non-euro-denominated investments.

 

The portfolio is managed by

Juhamatti Pukka

Juhamatti Pukka

Investment Objective and Risks

The aim is to achieve a return which exceeds the return of the benchmark during a 12-month investment horizon.

The level of diversification in the investment portfolio is large both within every fixed income asset class and between the asset classes which keeps the fund’s overall risk moderate. A particular characteristic of the fund is to achieve a high risk adjusted return by a large diversification among none or low correlating fixed income assets and by an active reallocation of assets among these asset classes.

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 fund’s floating-rate bond investments are susceptible to changes in risk premiums, the fund’s value may fluctuate.

The fund’s value is affected by interest rate risk

As money market funds carry a small interest rate risk, the effect of interest rate risk on the fund’s performance is small.

Monthly review

30.06.2020

Corporate bond markets continued to recover in June from the March bottom. The month was, however, divided in terms of performance since most of the positive return was accumulated during the first week of the month. The German 10-year rate ended the month 5 basis points lower at -0.45%.

The fund posted a strong 1.43% gain for the month. Despite the now over 3-month-old recovery from the March bottom, the short corporate bond market has recovered still only a bit over half of the widening while most long indices in the IG and HY are well over 60% recovered. All sectors performed positively in June. The best performers were Retail, Consumer Goods and Automotive. The Nordic new issue market had a bit of activity and we participated in Cibus 2023 and TietoEvry 2025 new issues.

Now ahead of us is a very interesting reporting season, since now with Q2 results we are seeing the full picture of the covid-19 effect in company profitability. Central banks, however, have flooded the markets with excess liquidity and companies have been using the opportunity to refinance a significant part of the upcoming 18-24 month maturities already. Despite the uncertainty on profits and the state of the covid-19 spread, the short corporate bond market spreads are wide absolutely and relative to history offering very attractive total return potential.

The yield to maturity was 2.79% and modified duration 2.25 at the end of June.

Fund facts

Type of fund Short-maturity corporate bond fund (UCITS)
Investment activity began 17.05.2004
Benchmark index 3 month Euribor
Profit distribution Fund-units are divided into A and B units. Profit share of at least 1.75% is distributed on A units annually.

Downloadable files

Invest

min. 1 000 €