Robeco Investment Grade Corporate Bonds I EUR

Peter Kwaak is Portfolio Manager Investment Grade in the Credit team. Prior to joining Robeco in 2005, he was Portfolio Manager Credits at Aegon Asset Management for three years and at NIB Capital for two years. Peter has been active in the industry since 1998. He holds a Master’s in Economics from Erasmus University Rotterdam and he is a CFA® charterholder. Daniel Ender is Portfolio Manager Investment Grade in the Credit team. Previously, he was a Credit Analyst at Actiam. Daniel started his career in the industry in 2018 at ABN AMRO. He has a Master’s in Financial Economics from Erasmus University Rotterdam and a Bachelor’s in Political Science and Economics from the University of Connecticut. Daniel also is CFA® charterholder. Joost Breeuwsma is Portfolio Manager Investment Grade in the Credit team. Prior to starting his career and joining Robeco in 2017, he obtained a Master’s with Distinction in Financial Mathematics from King’s College London. Joost Breeuwsma is Portfolio Manager Investment Grade in the Credit team. Prior to starting his career and joining Robeco in 2017, he obtained a Master’s with Distinction in Financial Mathematics from King’s College London. The Robeco Investment Grade Corporate Bonds 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.

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 0.01% 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.

Investors outside Luxembourg are subject to their national tax regime applying to foreign investment funds. We advise individual investors to contact their financial or fiscal adviser regarding their specific fiscal situation.

The fund incorporates sustainability in the investment process via exclusions, ESG integration, a minimum allocation to ESG-labeled bonds, 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. Furthermore, the fund invests at least 5% in green, social, sustainable, and/or sustainability-linked bonds. Lastly, where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.The following sections display the ESG-metrics for this fund along with short descriptions. For more information please visit the sustainability-related disclosures.The index used for all sustainability visuals is based on Bloomberg Euro Aggregate: Corporates ex financials 2% Issuer Cap.

During October, credit spreads remained relatively stable, contrasting with declines seen in other risky assets. The prevailing risk-off sentiment stemmed from several underlying factors, with the primary catalyst being increasing consensus that interest rates will stay higher for longer. Concerns on inflation remained at the forefront, especially after WTI surpassed USD 90 per barrel after continued voluntary production cuts by Saudi Arabia and Russia. The ECB delivered yet another 25 bps hike, bringing the deposit rate to a record high of 4.0%. Meanwhile, both the Fed and the BoE delivered a hawkish pause. Yields not only moved higher across the curve, but there was also a clear steepening. Eurozone Q2 GDP was revised to 0.1% QoQ, indicating economic stagnation. September PMIs are still below 50, with the services PMI up to 48.4, but future expectations fell, hinting at upcoming PMI declines. In China, activity data for August published in September brought further signs that the economy is stabilizing, following four months of slowing momentum. Piecemeal monetary easing continued, with the PBoC cutting the reserve requirement ratios for banks for the second time this year.

Based on transaction prices, the fund's return was 0.44%. The underlying portfolio outperformed its benchmark index, gross of fees. The benchmark return was mainly driven by the increase in underlying government bond yields, as the 10-year German Bund yield increased by 38 basis points to 2.84%. In contrast, credit spreads were relatively stable, with the Euro aggregate corporate index ending the month broadly flat at 130 basis points over underlying government bonds. As a result, European corporate bonds outperformed underlying treasuries. Relative performance is attributed to beta positioning and issuer selection, in line with our investment process. The contribution from our beta overweight position was modestly positive during the month, as we maintained a beta well above 1 throughout the month. Most of the outperformance this month came from issuer selection. At the issuer level, the largest positive contributions to performance came from TenneT, SPP Distribúcia and McDonald's.

Consensus views in the market have changed from a high likelihood of a recession to a most likely soft landing; at least in the US. We argue that this is precisely the time to remain cautious. The US economy has been remarkably resilient despite the sharpest hiking cycle in decades. The factors that caused the lag in monetary policy transmission have now largely played out. The European economy has not enjoyed the same fiscal impulse and is not immune to weakness in China, a key trading partner. This comes on top of the geopolitical risk already present with the war in Ukraine. The Chinese economy has shown outright signs of weakness and the level of monetary and fiscal support has been underwhelming. China faces similar challenges that resemble Japan's experience after 1990. Hence we are slightly long beta in investment grade and conservatively positioned in high yield. Within investment grade markets we see banks offering the best value. Senior banking paper continues to trade wider than the historical average. European credit spreads are trading wider than their US counterparts. In EM, we continue our cautious stance on the riskiest countries including China.