OP-Inflation-Linked Bond Fund is a long-term fixed-income fund investing its funds primarily in bonds issued by EEA and OECD member states and other public sector entities. This means that the fund seeks to achieve returns in real terms in spite of inflation.
The Fund seeks to hedge the fx risk related to other than eurodenominated investments. The issuers must have long-term ratings of at least Moody´s A or S&P A. The Fund invests primarily in countries such as Australia, Sweden, Germany, Canada, France, New Zealand, Great Britain and United States. The Fund seeks to hedge any foreign exchange risk related to non-euro investments.
The modified duration of the fund, a measure of its interest rate sensitivity, is typically 7–11. This indicates the negative NAV impact on the fund in terms of percentages, if the interest rate level rises by one percentage point. As the level of interest rates decreases, the NAV of the fund increases accordingly.
The fund’s investments are primarily made through direct bond investments, but the fund may also use derivatives to hedge against market fluctuations and to replace direct investments. Typically the fund invests its assets in issues of about 20-40 companies, but this number may vary reflecting the views taken by the portfolio manager.
The fund seeks to exceed the real yield of the governments bonds of investee countries. This yield means the difference between the bonds' nominal interest and the inflation rate.
The portfolio manager makes investment decisions based his prevailing view on the market. Key issues in the context of the fund’s investment decisions include the analysis of the inflation view of the portfolio management relative to the market’s inflation expectation and the adjustment of the fund’s portfolio to this.
The Fund’s benchmark index is a combination of several indexes. The composition of the benchmark index is described in the fund prospectus. With active investing, the Fund seeks to outperform its benchmark index in the long term. The Fund mainly takes notable active risk and it may differ significantly from the composition, weights and risk level of the benchmark index.