Evli Short Corporate Bond

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

NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
15.432 -1.10 -0.70 0.28 1.16 2.14
NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
29.362 -1.10 -0.70 0.28 1.16 2.44
NAV
20.10.2020
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
103.301 -0.94 -0.50 0.48 - 0.87

Risk

3/7

Morningstar

4/5

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
  • 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 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.

Responsibility

ESG factors are integrated into the fund’s investment decisions, and the fund follows Evli's general exclusion practices. The fund’s investments are monitored for violations of UN Global Compact norms and the Climate Change Principles, and the fund engages 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.

 

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

30.09.2020

September started like August ended with tightening credit spreads and positive performance, but the mood changed after mid-September. The credit market was at first resilient for the rout in equity markets, but eventually the credit market got the infection and a week-long weakness hit especially the high yield market. However, considering the strong rally in the credit market during the past months, the occasional weakness is not overly surprising. In fact, it has been our base case for the rest of the year to see spreads tighter at the end of the year, but during the second half to experience moments of elevated volatility.

For the fund, September was the first negative return month since March, with a total return of -0.13%. The best performing sectors were Retail and Technology, while Services and Healthcare underperformed. The new issue market was busy, and we added e.g. Adidas 2024, Ford 2025, Ryanair 2025, ZFF 2025 ja Kion 2025 bonds from the primary market.

We didn’t make significant changes to the fund during September since the emphasis in crossover companies is working well in the current market environment. The reach for yield is strong and the crossover segment is a low hanging fruit for the investment grade investor hunting positive yield. Although the credit market has recovered from the March bottom fast, the short end of the curve still offers significant tightening potential. At the same time, however, it is important to keep in mind the erratic nature of the Covid-19 pandemic and its effect on spread levels. Hence, we are still very selective with companies and we continue to emphasize issuers with strong balance sheets.

The yield to maturity was 1.93% and modified duration 2.15 at the end of month.

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 €