Evli Nordic 2025 Target Maturity

The fund’s goal is to achieve a roughly three percent annual yield over the long term. The fund does not have an official benchmark index. The yield expectation and risk of the fund is higher than that of funds that invest solely in government bonds.

The fund does not require its investments to be credit-rated, which means that the fund's investments are subject to an average or high credit risk. The credit risk arising from individual issuers is reduced by diversifying the investments among various issuers.

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. Lower 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.

The ECB raised the depo rate to 4%. It is expected that this was the last hike in this cycle. The market is pricing in the first rate cut to happen in summer 2024. Long interest rates moved quickly higher. The German 10-year government bond yield ended up at 2.84%. The Swedish and Norwegian central banks are also expected to be close to their peak rates at 4% and 4.25%, respectively, as inflation is slowing. The Nordic market is less sensitive to interest rate movements, as the SEK- and NOK-denominated markets are largely floating rate note markets. Also, the fixed coupon bonds are typically shorter in maturity than in Europe.

In September, the fund’s return was +0.47% (B-series). No major changes were made to the portfolio. The higher 3-month Euribor will increase the coupons in the FRN part of the portfolio. The portfolio is yielding 8.07% hedged to euro.

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: 743700F1H77UQ59SS852

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 does not have an official benchmark index.

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 does not have an official benchmark index.

Read more about Evli's responsible investing

Information on environmental and social characteristics of the fund in accordance with article 8 of Sustainable Disclosure Regulation (in force from January 1, 2023)

Report on the promotion of the fund's environmental and social characteristics in 2022