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As government bonds markets are currently characterized by strong dispersion in country returns, we believe a flexible and highly active approach is required to be able to address sovereign debt risk. As a result, Robeco’s Government Bond strategies are driven by outspoken active country allocation to manage market inefficiencies in valuation, risk and reward between countries.

Government bonds

Robeco Government Bonds is managed according to a two-step investment process. The first step involves active country allocation. It is based on a top-down assessment of macro-economic factors, as well as bottom-up research on country specifics. Research is focused on a country’s debt sustainability to gauge its capability to cope with debt, its current phase in the economic cycle as well as full integration of ESG criteria on a country level.

The second step involves adding interest rate overlays to optimize the portfolio for anticipated interest rate movements. Analysis is based on proprietary tools that summarize macro-economic data in their cyclical context. Additionally, part of the risk budget is allocated to Robeco’s time-proven quantitative duration model adding independent and non-consensus decision making to the portfolio.

Coupled with an integrated risk management approach, the process ensures that portfolios are positioned with the desired exposure to the countries and parts of the yield curve most likely to generate attractive (relative) returns.

Highlights:
  • Highly active country allocation to generate alpha.
  • Alternative for trackers or individual government bonds.
  • Exposure to interest rate movements and opportunities.
  • Use of time-proven quantitative duration model: IR > 0.5 since inception in 1995.
  • Experienced and tenured investment team.
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