The Evli European Investment Grade corporate bond fund is celebrating its 20th anniversary. It is already the second Evli fixed-income fund to reach the same milestone this year, as the Evli European High Yield corporate bond fund surpassed two decades in March. Jani Kurppa and Mikael Lundström, managers the respective funds, reveal the secrets of the fund’s success and longevity.
Just like Evli’s other funds, both funds celebrating their anniversary follow Evli's Principles for Responsible Investment in addition to separate climate principles. Based on the EU's Sustainable Finance Disclosure Regulation (SFDR), the funds have been given a light green (Article 8) rating. The investment grade corporate bond fund invests its assets in European high-rated, long-term corporate bonds with an average rating of at least Baa3/BBB-, while Evli’s high yield fund invests in lower-rated bonds with a rating of BB+ or lower.
"The corporate bond markets of today have an increasingly sensitive and powerful reaction to bad news – and as the Covid-crisis has shown, macroeconomic developments can take unexpected turns and sometimes downturns are inevitable," says Senior Portfolio Manager Jani Kurppa.
"That is why we here at Evli focus on investments that we believe will endure even in difficult times. We pay particular attention to the responsibility of our investments, as an actively and responsibly managed portfolio can offer better returns than ETFs, even after management fees. This has been proven by our strategy in the eight years that I have managed the investment grade fund."
Evli’s Investment Grade corporate bond fund has an MSCI sustainability rating of AAA (excellent) and a carbon footprint that is clearly below the European corporate bond fund market. The fund's strategy has received a sustainability rating of 5 from Morningstar, the highest rating.
The best results arise from a basis of trust
Jani Kurppa, who is also responsible for the strategy of Evli's Nordic Corporate Bond fund, has managed the Evli European Investment Grade fund since 2013. In 2020, he was ranked 107th out of 250 top European portfolio managers in Citywire's EuroStars ranking (all asset classes).
"At Evli, we are lucky because we can easily exchange views between the different fund teams, which broadens our perspective and generates new ideas. Although the fund's own portfolio manager is ultimately responsible for the investment decisions, the atmosphere of trust allows us to build portfolios based on our own vision without being confined to certain credit ratings or sectors," says Kurppa.
A long tradition of expertise is also a strength of Evli's portfolio management, as Mikael Lundström, Chief Investment Officer and founder of Evli's investment grade and high yield funds, as well as the 22-year-old Evli Corporate Bond fund, is still actively involved in the teamwork. He still manages both the high yield fund and the Evli Corporate Bond fund, which invests in both higher and lower rated European bonds, in accordance with its original strategy.
"The corporate bond market has changed significantly over the past couple of decades, but we have kept our investment process focused on companies that generate strong cash flow. This approach has worked well over the years because bonds from cash-generating companies tend to be better. Our expertise in the Nordic markets also allows us to invest in unrated Nordic corporate bonds, which differentiates us from other European corporate bond strategies in both the investment grade and high yield segments," says Mikael Lundström.
For more information:
Mikael Lundström, Chief Investment Officer, Evli Fund Management Company Ltd, tel: +358 9 4766 9146, email@example.com