Robeco Financial Institutions Bonds IH BRL

Credit spreads tightened rapidly in the first week of December, reversing part but not all of the November spread widening. European swap spreads still trade at a relatively wide level, which we think can be attributed to technical factors, like a shortage of high-quality collateral (German government bonds) and year-end effects. That means that higher swap spreads are an important factor explaining why credit spreads versus government bonds have not fully recovered yet. Concerns about the latest Covid wave in Europe and worries around the new Omicron variant are still playing a role. Negative headlines were followed by positive news stories, determining short-term sentiment on capital markets. Central banks seem to be undistracted by the latest Covid wave, as they are gradually becoming less accommodative. The Bank of England surprised the market by raising interest rates in its December meeting. The Federal Reserve confirmed that it will speed up tapering and signaled that it envisions three rate hikes for 2022. The ECB seems to be least in a hurry to become more hawkish, though the bank confirmed that net PEPP bond purchases will end in March 2022.

All currency risks are hedged.

Robeco Financial Institutions Bonds fund make use of derivatives for hedging purposes as well as for investment purposes. These derivatives are very liquid.

This share class of the fund does not distribute dividend.

The fund incorporates sustainability in the investment process via exclusions, ESG integration and engagement. The fund does not invest in credit issuers that are in breach of international norms or where activities have been deemed detrimental to society following Robeco's exclusion policy. Financially material ESG factors are integrated in the bottom-up security analysis to assess the impact on the issuer's fundamental credit quality. In the credit selection the fund limits exposure to issuers with an elevated sustainability risk profile. Lastly, where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.

Robeco Financial Institutions Bonds is an actively managed fund that mainly invests in subordinated euro-denominated bonds issued by financial institutions. The selection of these bonds is based on fundamental analysis. The fund's objective is to provide long-term capital growth. The fund promotes certain ESG (environmental, social and corporate governance) characteristics within the meaning of Article 8 of the European Sustainable Finance Disclosure Regulation, and integrates ESG and sustainability risks in the investment process. In addition, the fund applies an exclusion list on the basis of controversial behavior, products (including controversial weapons, tobacco, palm oil and fossil fuel) and countries, alongside engagement. The fund offers a diversified exposure to subordinated bonds issued by banks and insurance companies and the focus of the fund is, in general, towards higher rated issuers (investment grade). The majority of bonds selected will be components of the benchmark, but bonds outside the benchmark may be selected too. The fund can deviate substantially from the weightings of the benchmark. The fund aims to outperform the benchmark over the long run, while still controlling relative risk through the application of limits (on currencies and issuers) to the extent of the deviation from the benchmark. This will consequently limit the deviation of the performance relative to the benchmark. The Benchmark is a broad market-weighted index that is not consistent with the ESG characteristics promoted by the fund.

Risk management is fully embedded in the investment process to ensure that positions always meet predefined guidelines.