The sweet spot in European credit
European corporate bonds are offering a wide range of yields across rating categories, with higher quality bonds sometimes struggling to deliver positive real returns against higher inflation. Issuers of high yield bonds have become a welcome ally in this fight, but remain exposed to economic pressures.
The challenge for investors in 2024 is to find the sweet spot that combines the best of both worlds.
Finding the sweet spot in European Credit
Risk & return profile of the crossover space
(gross of fees, past 10 years since Nov. 2013)
With the Nordea 1 – European Cross Credit Fund, we aim to capture the most promising opportunities within the cross-over space from both Investment Grade (IG) and High Yield (HY) bonds.1
The targeted result: High Yield-type returns with Investment Grade-type volatility and risk1.
Why the Nordea 1 – European Cross Credit Fund?
Looking for higher returns while keeping risk in check?
In need of other credit solutions to fit your portfolio?
- Actively managed Investment Grade portfolio managed by Nordea Credit Team in collaboration with our in-house Responsible Investments Team
- Well-proven and established Credit team applying a fundamental bottom-up approach with full ESG integration (including corporate engagement)3
- Focus on company specific research to identify long term changes critical to credit quality
- Play the crossover universe of High Yield and Investment Grade bonds to take advantage of structural inefficiencies created by rating agencies
- Bottom-up driven approach determined to find only bonds of companies with solid fundamentals
- Aim to yield more than an Investment Grade portfolio with a lower risk than a “pure” High Yield one
- Actively managed credit portfolio that aims for responsible performance in the European high yield market
- Bottom-up credit selection to seek relative value across the full risk spectrum with no top-down bets
- Robust integration of ESG analysis in the investment process with the goal to select the right companies, both from a return and a sustainability perspective3
For main risks see risk information below and further risks associated with the funds please see respective Key Information Document (KID) and current prospectus:
• Convertible securities risk: Because convertible securities are structured as bonds that typically can, or must, be repaid with a predetermined quantity of equity shares, rather than cash, they carry both equity risk and the credit and default risks typical of bonds (only for Nordea 1 – European High Yield Stars Bond Fund).
• Credit risk: A bond or money market security, whether from a public or private issuer could lose value if the issuer’s financial health deteriorates.
• Derivatives risk: Small movements in the value of an underlying asset can create large changes in the value of a derivative, making derivatives highly volatile in general, and exposing the fund to potential losses significantly greater than the cost of the derivative.
• Hedging risk: Any attempts to reduce or eliminate certain risks may not work as intended, and to the extent that they do work, they will generally eliminate potentials for gain along with risks of loss.
• Prepayment and extension risk: Any unexpected behaviour in interest rates could hurt the performance of callable debt securities (securities whose issuers have the right to pay off the security’s principal before the maturity date).
1There can be no warranty that an investment objective, targeted returns and results of an investment structure is achieved. The value of your investment can go up and down, and you could lose some or all of your invested money.
2AuM as at 30/09/2024. Performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount invested. The value of your investment can go up and down, and you could lose some or all of your invested money.
3For more information on sustainability-related aspects of the fund, please visit sustainability related disclosures page.
