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Bond funds

Bond funds

Bond funds may be suitable for a private or business client with stable and low profit expectations and risk tolerance:

  • As a primary product, if there is intention to invest into government or corporate debt through bonds
  • For the purpose of hedging risks in addition to equities investments
  • To manage a business client’s cash flows

Bond markets offer patient investors an attractive risk-reward ratio. Although bonds as asset class are considered to be less risky than equities, there are bonds and bond funds with different expected rates of return and risk levels.

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Bond markets offer patient investors an attractive risk-reward ratio. Although bonds as asset class are considered to be less risky than equities, there are bonds and bond funds with different expected rates of return and risk levels. More conservative funds invest in shorter term government bonds of developed countries. Conservatism means both a lower possible rate of return as well as lower risk. Riskier bond funds, on the other hand, invest in bonds with a low credit rating or in developing markets, setting a higher rate of return as the goal.

The advantages of bond funds are the following:

  • Compared with equities, bonds can offer a relatively secure and stable return at a lower risk level.
  • In case the equities market falls, rates of returns on bonds generally balance the investment portfolio.
  • Investing in bonds offers a chance to earn a rate of return which is slightly higher than the rate of return on money market instruments.

SEB Short Bond Fund is a low risk fund invested in short-term corporate and state bonds. This is for clients desire a rate of return comparable with short-term deposits and are prepared to allocate their money for at least one year.
SEB Dynamic Bond Fund is a low risk fund invested in the Nordic markets. The fund is for clients who wish to grow the value of their investments and are ready to allocate their money for at least two years.
SEB Corporate Bond Fund is a low risk fund invested in bonds from European companies. The fund is for clients who wish to grow the value of their investments and are ready to allocate their money for at least three years.
SEB Danish Mortgage Bond Fund is a low risk fund mainly invested in bonds issued by Danish financial institutions and guaranteed by real estate (mortgage bonds) and to a smaller extent in Danish government bonds. This is for clients who wish to complement their investment portfolio with mortgage bonds fund and are prepared to allocate their money for at least three years.
SEB Sustainable High Yield Fund is a moderate risk fund invested globally in corporate and state bonds with a credit rating lower an than investment grade credit rating such as S&P rating “BBB.” The fund focuses on US and Europe debt securities. This fund is suitable for clients who expect a higher rate of return in the long term in comparison to the rate of state bond investments and who are prepared to allocate their money for at least three years.

Investment risks

The market value of an investment by an investor in the fund may both rise and decline, with no guarantee of either the preservation or the growth of the value of the investment. A detailed overview of the main risks related to investing in funds is provided in the public offer prospectus for the relevant fund units.

Important information
You always have to keep in mind before you make an investment decision that past rates of return and historical activities of the fund do not constitute a promise or an indicator of achievement of the rate of return or activity goals of the fund in future periods.
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