Evli Finnish Small Cap

Equity fund that invests in Finnish small cap companies

NAV
02.12.2022
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
494.753 -31.72 -29.27 8.32 9.11 11.93
NAV
02.12.2022
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
67.972 -31.35 -28.85 - - -29.94

Risk

6/7

Morningstar

4/5

Recommended Investment Horizon

at least 7 years

Administrative fees

1.60 % p.a.

Suitable for investors

  • who wish to invest in an actively managed and diversified portfolio of Finnish small cap equities
  • who are prepared to tolerate greater price fluctuations in the short term in order to earn a better return in the long term
  • 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 € or 50 €/month

Investment Policy

Evli Finnish Small Cap Fund is an actively managed equity fund that invests its assets primarily in the shares of publicly listed Finnish small and mid cap companies. The aim of the fund is to exceed the total return of the benchmark index over the long term. Stock selection is the main source of outperformance, and every position is expected to contribute to fund performance. Therefore the fund has a focused portfolio of only about 25-30 individual stocks.

 

The portfolio is managed by

Janne Kujala

Janne Kujala

Investment Objective and Risks

The aim is to achieve a return which, over a period of more than four years, exceeds the return of the benchmark index.

As all of the fund’s assets are invested in the equities or equity-linked securities of small cap companies, the fund unit value can fluctuate abruptly within a short period. The fund’s overall risks are reduced by diversifying the portfolio, rather than focusing on a single issuer’s equities.

Monthly review

31.10.2022

After an awful September, world equity markets staged a comeback in October on hopes of a pivot from the Fed (the pivot being the Fed changing course from “more tightening” to “not that much tightening anymore”, or some such sentiment). Most developed equity markets were up mid- to high-single-digits in October. In Finland, the third quarter reporting season was in full swing. On an aggregate level, earnings have still been on a good level for Finnish companies, with earnings surprises skewed to positive compared with analyst expectations, as topline growth has held up well, likely on the back of increased pricing. However, in individual names, earnings surprises in many cases led to very large reactions in share prices, both up and down.

The fund lagged the benchmark somewhat in October. Relative performance was hurt the most by our overweight in private healthcare provider Terveystalo (stock tanked on big earnings miss due to service mix not normalizing post-pandemic) and an underweight in Cargotec (big earnings beat, stock up 20% for the month). An overweight in Kempower (another great earnings report) and underweight in Eq aided relative performance the most.

During the month, we sold the remainder of our Modulight position. We reduced our positions in Remedy, Qt Group and Detection Technology and opened a new position in Huhtamäki.

Fund facts

Type of fund Finnish Equity fund (UCITS)
Investment activity began 04.12.1992
Current strategy since 04.10.2010
Benchmark index Carnegie Small CSX Return Finland
Profit distribution Fund contains only growth units B, on which no annual return is distributed.

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: November 30, 2022
Legal Entity Identifier: 743700WUKDUMIKOSUL38

a) Summary

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.

Downloadable files

Invest

min. 1 000 € or 50 €/month