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Lazard Nordic High Yield: Confidently on Track After Three Years

In just over a decade, the Scandinavian bond markets have undergone structural changes, and the region has established itself as one of the most sustainable and developed in the world. In the high-yield bond segment in particular, the region offers attractive returns with moderate risk – a profile that is increasingly attracting international investors. One of the established offerings in this market is the Lazard Nordic High Yield Bond Fund, which celebrates its third anniversary in November 2025.

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Confidently on Track After Three Years

Since its launch in November 2022, it has grown steadily and, as of October 15, 2025, manages over €545 million – a reflection of the increasing relevance of and global interest in Nordic high-yield bonds.

High-yield bonds generally offer investors significantly higher returns than investment-grade bonds.

Although default rates for Nordic high-yield bonds are comparable to those of traditional global or European high-yield bond markets, they offer significantly higher coupons and yields. This is because many of these issuers are less well known and do not have external credit ratings.

The Changing Composition of European Stock Markets

Data as of September 30, 2025; Source: DNB, ICE, Lazard.
DNB Markets Nordic High Yield Index, ICE BofA Euro High Yield Index

Despite their regional focus, we believe that Nordic high-yield bonds exhibit low correlation with other asset classes, making them a valuable diversifier.

In addition to broad sector and geographic diversification, exposure to this market offers a unique risk profile that further enhances the overall diversification effect.

Nordic high-yield bonds exhibit significantly lower volatility compared to traditional high-yield markets due to their extremely low interest rate risk, shorter spread duration, and higher coupons.

Combined with high total returns, this results in an exceptionally high Sharpe ratio. The result is a unique approach that offers high return potential with low volatility.

The Changing Composition of European Stock Markets

Data as of September 30, 2025; source: Bloomberg, DNB, ICE, Lazard.
Annualized performance and volatility over the last 3 years

As bottom-up investors, portfolio construction is based on in-depth credit analysis of individual issuers. The investment process is geared toward selectively investing in attractive opportunities while avoiding unattractive, uncompensated risks. Because the Nordic high-yield market does not entail significant interest rate risk due to its structure and has a low spread duration, a strong focus on credit quality is especially warranted, which in turn supports the strategy’s success.  

The Changing Composition of European Stock Markets

Data as of September 30, 2025; Source: DNB, ICE, Lazard

Since establishing our European bond investment platform in 1999, our high-caliber Global Fixed Income team—now active worldwide—has steadily expanded and refined its active portfolio management expertise across multiple economic cycles.

Since the team began managing active strategies, Scandinavian bonds have been an integral part of its offering.

Over the past two decades, team members have developed deep expertise in regional markets, currencies, sectors, and issuers, while building a strong network of counterparties, analysts, and policymakers across Scandinavia.

How can investors invest in Nordic high-yield bonds?

Investors can invest specifically in the Nordic niche market with the Lazard Nordic High Yield Bond Fund (u. a. A Acc EUR, ISIN: IE000MHDVN90), launched in November 2022 and managed by Daniel Herdt and his experienced team.

This presents an opportunity to enhance a bond or high-yield portfolio with a component that delivers both attractive yields and meaningful diversification.

With fund assets now surpassing €545 million and its three-year anniversary in November 2025, the strategy’s trajectory highlights its proven success and increasing relevance in the market.

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Disclaimer

This content reflects the opinion of the author(s), and their conclusions may differ from those elsewhere within Lazard Asset Management. Lazard strives to provide our investment professionals with the autonomy to develop their own investment views, supported by informed information sharing within the firm. The information and opinions presented are obtained from sources Lazard believes to be reliable. Lazard does not guarantee their accuracy or completeness. All opinions expressed herein are subject to change.

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