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Based on transaction prices, the fund's return was 1.23%. The high yield bond index delivered a small negative total return for the month. For the year, the total return is still deeply in negative territory at -8.5%. The fund outperformed the index by 97 bps in May, bringing the outperformance for the year to +151 bps. For the month, it was all about issuer selection, as that added 99 bps versus -3 bps from beta attribution. Our up in quality positioning added to performance. We benefited the most by being underweight in the US single-B space. Our regional preference for Europe versus US high yield performed more or less in line. On an issuer level, being underweight in Bausch Health was the largest contributor with 10 bps. This company is going through somewhat of a transformation after it decided to spin off its stable lens business Bausch & Lomb. What remains is a pure pharmaceutical company that is heavily dependent on its Xifaxan drug, which has a patent cliff in 2028. In the meantime, the company faces a trial that could potentially result in losing its patent in 2024. Not owning Endo International also added 8 bps. Its bonds dropped 30 points, as the market anticipates a debt restructuring. Not owning Dish also added 5 bps, as top-line pressures continue.
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High yield spreads have been very volatile in May. Spreads widened in the first weeks to new highs and reached a level as high as 485 bps, which is in line with the long-term average for high yield. During the last three days of May, the spread widening reversed completely, and spreads ended the month at 426 bps. The biggest market shift in May was the changing narrative from inflation risks to growth risks, while headline CPI numbers remain above expectations. Next to that, supply chains remain disrupted and a slowdown in China, due to its zero-Covid policy, and elevated geopolitical risks are becoming a drag on global growth expectations. The probability of a recession is increasing, and this is putting pressure on central banks and their monetary policies. Earnings figures are more often disappointing and EBITDA outlooks are being revised downwards. Single B-rated issuers in the US suffered the most, and underperformed higher quality debt. The volatility and negative sentiment in high yield markets is also weighing on the new issue market, that came in at a meager USD 4 billion for May. Flows were again negative for the month, although dip buyers emerged towards month-end.
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All currency risks are hedged.
Robeco High Yield Bonds make use of derivatives for hedging purposes as well as for investment purposes. These derivatives are very liquid.
The fund distributes dividend on a quarterly basis. This fund aims to pay a quarterly dividend of 1.5%. The dividends referred to are target dividends and may be subject to change as a result of market conditions.
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 High Yield Bonds is an actively managed fund that invests in high yield corporate bonds. The selection of these bonds is mainly based on fundamental analysis. The fund's objective is to provide long-term capital growth. The fund promotes E&S (i.e. Environmental and Social) characteristics within the meaning of Article 8 of the European Sustainable Finance Disclosure Regulation, integrates sustainability risks in the investment process and applies Robeco’s Good Governance policy. The fund applies sustainability indicators, including but not limited to, normative, activity-based and region-based exclusions, and engagement. The fund invests in corporate bonds with a sub-investment grade rating, issued primarily by issuers from developed markets (Europe/US). The portfolio is broadly diversified, with a structural bias towards the higher rated part in high yield. Performance drivers are the top-down beta positioning as well as bottom-up issuer selection. The majority of bonds selected will be components of the benchmark, but bonds outside the Benchmark index 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.
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.
Until recently, markets were exclusively focusing on how the global economy would emerge from a Covid-disrupted world. The common market expectation was one of a continued economic recovery with inflationary risks attached. With the war in Ukraine, the growth narrative for Europe in particular is under threat, while inflation is getting an additional boost. As Russia is a major exporter of a variety of commodities, supply shortages are quickly becoming a fierce cost-push factor. The high energy dependency of Russia will be reduced, but at a cost: higher prices but also risks to growth, output and profitability. That makes stagflation a real scenario now, especially for energy-dependent Europe. A slowing economy and rising yields is the worst environment for leveraged companies. We expect more dispersion, underperformance of weak credit quality and more defaults. We remain underweight in the more vulnerable B and CCC space. Over the past quarter, credit markets have cheapened though, in particular in the BB space. In better-quality high yield we therefore selectively see attractive valuation levels. To sum up, we firmly remain up in quality and accept a beta below 1 as a result.
Sander Bus is Co-Head of the Credit team and Lead Portfolio Manager Global High Yield Bonds. He has been dedicated to High Yield at Robeco since 1998. Previously, Sander worked for two years as a Fixed Income Analyst at Rabobank where he started his career in the industry in 1996. He holds a Master's in Financial Economics from Erasmus University Rotterdam and he is a CFA® charterholder. Roeland Moraal is Lead Portfolio Manager European High Yield in the Credit team. Before assuming this role, he was Portfolio Manager in the Robeco Duration team and worked as an Analyst with the Institute for Research and Investment Services. Roeland started his career in the industry in 1997. He holds a Master's in Applied Mathematics from the University of Twente and a Master’s in Law from Erasmus University Rotterdam.
The Robeco High Yield fund is managed within Robeco’s credit team, which consists of nine portfolio managers and twenty-three credit analysts. The portfolio managers are responsible for the construction and management of the credit portfolios, whereas the analysts cover the team’s fundamental research. Our analysts have long term experience in their respective sectors which they cover globally. Each analyst covers both investment grade and high yield, providing them an information advantage and benefiting from inefficiencies that traditionally exist between the two segmented markets. Furthermore, the credit team is supported by three dedicated quantitative researchers and four fixed income traders. On average, the members of the credit team have an experience in the asset management industry of seventeen years, of which eight years with Robeco.
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ISIN | LU1618351966 |
Bloomberg | RHYBCHU LX |
Valoren | 36852504 |
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1st quotation date | 1495065600000 |
Close financial year | 31-12 |
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The fund is established in Luxembourg and is subject to the Luxembourg tax laws and regulations. The fund is not liable to pay any corporation, income, dividend or capital gains tax in Luxembourg. The fund is subject to an annual subscription tax ('tax d'abonnement') in Luxembourg, which amounts to 0.05% of the net asset value of the fund. This tax is included in the net asset value of the fund. The fund can in principle use the Luxembourg treaty network to partially recover any withholding tax on its income.
For private taxpayers in the Netherlands their assets in the fund belong in box 3. Investors pay on balance 1.2% investment yield tax per year on their average nets assets in box 3. The above is based on current fiscal legislation in the Netherlands. Shareholders are advised to consult their tax adviser regarding their own specific circumstances. In the Netherlands 25% dividend tax is deducted on cash dividends for all shareholders (regardless of where the shares are held). Shareholders who are not liable to pay tax in the Netherlands and are living in countries with a Double Tax Relief Treaty with the Netherlands may, depending on the treaty, re-claim a part of the dividend tax from the Dutch fiscal authorities. For fiscal questions we advise individual investors to contact their service channel or fiscal adviser.
The information contained on these pages is for marketing purposes and solely intended for Qualified Investors in accordance with the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”) domiciled in Switzerland, Professional Clients in accordance with Annex II of the Markets in Financial Instruments Directive II (“MiFID II”) domiciled in the European Union und European Economic Area with a license to distribute / promote financial instruments in such capacity or herewith requesting respective information on products and services in their capacity as Professional Clients.
The Funds are domiciled in Luxembourg and The Netherlands. ACOLIN Fund Services AG, postal address: Affolternstrasse 56, 8050 Zürich, acts as the Swiss representative of the Fund(s). UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zurich, postal address: Europastrasse 2, P.O. Box, CH-8152 Opfikon, acts as the Swiss paying agent. The prospectus, the Key Investor Information Documents (KIIDs), the articles of association, the annual and semi-annual reports of the Fund(s) may be obtained, on simple request and free of charge, at the office of the Swiss representative ACOLIN Fund Services AG. The prospectuses are also available via the website www.robeco.ch. Some funds about which information is shown on these pages may fall outside the scope of the Swiss Collective Investment Schemes Act of 26 June 2006 (“CISA”) and therefore do not (need to) have a license from or registration with the Swiss Financial Market Supervisory Authority (FINMA).
Some funds about which information is shown on this website may not be available in your domicile country. Please check the registration status in your respective domicile country. To view the RobecoSwitzerland Ltd. products that are registered/available in your country, please go to the respective Fund Selector, which can be found on this website and select your country of domicile.
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