Underlying reference. The performance of the bond depended on the underlying basket of 10 international, well established brand stocks with equal weight in each one. At the maturity of the bond, the result of the four best performing equities was replaced by an increase of +40%.

Index-linked bond performance review

The bond was structured to benefit from the appreciation of a basket of ten selected shares from the Global 30 recommendation list published by Nordea Investment Strategy & Advice. Global 30 is an equity recommendation list consisting of 30 attractive shares from every sector worldwide. In addition to company-by-company analysis, several factors are taken into consideration when selecting the shares for the recommendation list, such as Nordea's Investment Strategy and forecasts on the general trend in the equity market and the different sectors.

The bond was issued at the time the global economic recovery was entering its main phase. Despite accelerating economic growth there was still enough slack in the economy, which kept wage and inflation pressures under control, meaning that global central banks were able to maintain accommodative monetary policy. Such conditions created an environment of synchronized global economic growth, which is ideal for strong corporate earnings growth driving equity prices higher. As a result, world equity market experienced an unusually benign uptrend with low volatility during years 2016 and 2017. And although in 2018 tighter monetary policy and slowing economic growth brought volatility back to the market, the expectation of additional easing by global central banks helped equities make back all the losses and reach new all-time highs.

The underlying basket has underperformed the overall market due to high exposure to energy sector and British companies. Energy sector stocks suffered from the oversupply of crude oil, which led to lower prices and decreased producer profits. British companies were hurt by the uncertainty stemming from Brexit, which led to higher cautiousness of investors towards British stocks. Still the bonds managed to provide slightly positive return while having a very low risk.

Index-linked bond performance

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