In the world of finance, the Nordic Corporate Bond Market is unique. It offers high positive returns combined with lower volatility in a politically stable and economically strong environment – something that makes it very attractive to investors.
The size of the Nordic Corporate Bond market is almost the same size as that of the European High Yield market, and comprises of almost 500 issuing companies. Around 54 per cent of issuers are unrated, making the Nordics home to one of Europe’s largest markets for unrated issuers, offering a wealth of investment opportunities.
Unrated Nordic bonds are ripe pickings for investors as they offer excess returns of approximately 100-200 bps compared with officially-rated Euro corporate bonds with a similar risk level. Local Nordic institutions, who tend to be buy-and-hold investors, hold a majority of these unrated bonds, leading to relatively very low volatility levels.
The Nordic Bond Market and all its opportunities are home ground for Evli. Its investment success is based on being able to find superior risk/return profiles, achieved by using a cash-flow based, analytical approach to individual credits, applying a bottom-up process with high active share. It is a recipe that Evli has tried, tested, and mastered over two decades.
When expertise truly matters
“Evli has done uncompromising work in the fixed income asset class for 20 years and it is great to see the results,” says Chief Investment Officer Mikael Lundström.
One of the results Lundström is referring to is the recognition bestowed upon Juhamatti Pukka’s Evli Short Corporate Bond fund and Wilhelm Bruun’s Evli Nordic equity fund, which were awarded as best funds in their respective categories in Europe at the Lipper Fund Awards 2020. In France, Evli received the award of best fixed income house among smaller fund management companies. In addition, Morningstar has awarded Evli Fund Management Ltd as the best fund management company in Sweden at The Morningstar Fund Awards 2020.
“They are a testimonial to the strong competitiveness of our fixed income expertise in Europe and the strength of our funds,” notes Lundström.
Choosing the right partner
Evli’s fund managers play a key role in making this work. They combine various fixed income classes where possible and focus on finding real credit quality rather than official credit ratings.
Their investment style is also active, with investments only being made in issuers they like, regardless of their weight in the index. This also includes the active utilisation of different credit segments, both rated and unrated.
All of this makes Evli and its funds - including its newest Nordic 2025 Target Maturity Fund with three striking features: access to the unique Nordic corporate bond market, return expectation of 3% p.a. and deep ESG integration - a favourite with investors looking for partners with long and successful track records.