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As sector developments are global, Robeco’s credit analysts have a sector responsibility irrespective of grade or country of origin. This is a unique approach, which allows us to capitalize on the inefficiencies resulting from current market segmentations.
Trump’s election will lengthen the business cycle, overheat the US economy and might trigger more Fed rate hikes. Corporate credit quality keeps deteriorating. Still, we need a bigger shock than Trump to derail global credit markets. The Fed might do it in the medium term. We remain positioned close to a neutral beta while trading the ranges in the short term.
The recent rise in yields has boosted the performance of financial credits, the subordinated segment in particular. The insurance sector in particular can act as a great hedge for further rising yields, if and when this occurs.
One of the biggest challenges facing fixed income investors today is how to achieve attractive returns in a dysfunctional market environment. In such a climate, global, unconstrained credit strategies can prove their worth, as they have the freedom to pursue opportunities throughout global credit markets, without being limited by traditional benchmarks.
Debt gets a bad rap, creating images of human figures bound in chains… but is it really that bad? It is a lot more complex than that, says asset allocator and debt investor Lukas Daalder in his analysis of the thorny subject for Robeco’s new five-year outlook.
The ECB’s corporate sector purchase program has given investment grade corporate bonds a huge boost. Moreover, growth in ‘corporate hybrids’ and ‘reverse Yankees’ offers attractive yield pick-up opportunities.
The market practice of ‘segmentation’ – where investors allocate money to specific asset class segments such as investment grade or high yield bonds – has been commonplace over the years. But this sort of ‘silo-thinking’ remains an inflexible approach.
One of the cornerstones of the investment philosophy of Robeco’s Credit team is that avoiding losers is more important than picking every winner. The team believes that integrating environmental, social and corporate governance (ESG) factors into its analysis strengthens the ability to assess the downside risk of its credit investments. The Credit team is therefore convinced that ESG and credit analysis are a perfect fit.
Institutional investors are becoming increasingly aware of the fact that trends such as population growth, the scarcity of raw materials and globalization have an impact on a company's risks and opportunities. Under the pressure of regulators and investors, such as participants in pension funds, sustainable investing is slowly but surely evolving from a 'niche' to a general trend.
Investing in ETFs can be very risky, especially during periods of limited liquidity. Patrick Houweling and Victor Verberk explain why and how active management and the use of derivatives can provide both a solution and an investment opportunity.
Today Robeco proudly launched two new credit funds: Robeco Global Credits and Robeco Emerging Credits. Both funds will apply a total return strategy giving greater flexibility to invest into other asset classes. This will give a diversified exposure to the global credit markets.
Ground-breaking research by Robeco that changed the way the riskiness of corporate bonds can be evaluated has celebrated its 10th anniversary. This riskiness needs to be carefully calculated as bonds issued by companies have a greater chance of defaulting than government bonds. Their returns can also be more volatile, as they are linked to the underlying performance of the company that issues the bond.