Evli launches a fund that invests in Nordic high yield corporate bonds
20 MAR, 2025
By Jose Luis Palmer from RankiaPro Europe
The Nordic manager Evli has announced today the launch of Evli Nordic High Yield. This is a fund that invests in high yield corporate bonds from issuers in Nordic countries, denominated in euros. The fund managers are Jani Kurppa and Einari Jalonen.
The Evli Nordic High Yield fund achieves the highest returns with the lowest interest rate risk, for which, it relies on economic stability in the Nordic region, and the high credit quality of the issuers.
The Nordic manager has a broad expertise in corporate bonds since it launched its first fund that invests in this type of asset in 1999. With a primary focus on the cross over credit segment (lower quality investment grade and higher quality high yield), Evli manages 7 Bn € in corporate bond funds, of which 4 Bn € are Nordic corporate bond funds.
Evli Nordic High Yield Fund offers investors the most balanced way to benefit from earning additional return in a market that requires deep local knowledge. Evli's experience in the Nordic market and track record in fixed income allows us to diversify the portfolio both in terms of sectors and in the selection of companies, which are fundamentally those with a constant and predictable cash flow, capable of paying coupons, and with low levels of debt.
Investing in the Nordic countries offers clear advantages to investors. Because it is a region with robust economic structures, sustainable fiscal policies and strong exporting industries, precisely the ingredients that create an ideal environment for high yield bonds. In addition, the Nordic countries stand out for their high integration of the ESG aspect in their economic activity, and the high degree of sustainable investment.
Janni Kurppa, co-manager of the fund and Senior Portfolio Manager at Evli
Advantages of the asset class and the Nordic high yield bond market
Investing in high yield corporate bonds from Nordic issuers offers a number of advantages to investors. The main one of these advantages is an additional return compared to European corporate bonds, between 100 and 200 basis points, with a similar risk level (default rate). Currently, the fund's return is around 7%, about 170 basis points more than the average of European high yield bonds.
The asset presents other additional advantages. The duration of interest rates in Nordic high yields is lower than that of euro high yields, as most of the bonds issued are variable rate, with quarterly coupon adjustments. It is an asset with less volatility and better returns than its comparables; and the spread (difference in corporate bond/sovereign bond returns) is greater compared to the spread of US and European corporate bonds.
Regarding the Nordic high yield bond market, it also presents numerous advantages compared to the European one. Its size is 75 Bn €, compared to 372 Bn € of the European one; recovery rates (percentage of capital that investors recover in case of issuer default) are high, close to 80%; most issues (75%) lack a credit rating, which provides extra return; and issues are usually in floating bonds, which allows the investor to protect against inflation. Finally, this market has a lower default rate, given the high solvency and business solidity of Nordic companies.
