Robeco High Yield Bonds IExH USD

Sander Bus is CIO and Portfolio Manager High Yield Bonds in the Credit team. 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 Portfolio Manager 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.

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 who are not subject to (exempt from) Dutch corporate-income tax (e.g. pension funds) are not taxed on the achieved result. Investors who are subject to Dutch corporate-income tax can be taxed for the result achieved on their investment in the fund. Dutch bodies that are subject to corporate-income tax are obligated to declare interest and dividend income, as well as capital gains in their tax return. Investors residing outside the Netherlands are subject to their respective national tax regime applying to foreign investment funds. We advise individual investors to consult their financial or tax adviser about the tax consequences of an investment in this fund in their specific circumstances before deciding to invest in the fund.

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 2% 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 US Corporate High Yield + Pan Euro HY ex Financials 2.5% Issuer Cap.

In the month of July, the US high yield market witnessed some spread widening, as the OAS grew by 7 basis points to 324 bps. At the same time, yield-to-worst contracted by 27 bps, ending the period at 731 basis points. The strong rally during the first 2 weeks was led by growing anticipation that the Fed would cut rates by their September meeting. This was on the back of weak data coming in as US jobs reports showed the unemployment rate moving up to 4.1% in June, the highest level since November 2021. In addition we got a downward revision on the NFP growth. The biggest catalyst for these rate cut expectations was the latest CPI print. That showed the weakest monthly core CPI since January 2021. While the data was surprising on the downside, there were also a few disappointing earnings results that cast doubts on the massive rally. In the Eurozone, rates were also unchanged and inflation has kept its downward trajectory. New issuance in the US high yield market was the lightest in 2024, with USD 19.5 bln worth of bonds being printed. However, default activity was elevated, with 5 companies filing for chapter 11 (EUR 4.9 bln total).

Based on transaction prices, the fund's return was 1.32%. In July, the high yield bond index recorded a total return of 1.64%. This result has been driven by underlying government yield movement, which fell consistently throughout the month, whereas spread widened for the month. The portfolio underperformed versus the benchmark by 42 bps. Issuer selection detracted 35 bps whereas beta positioning was a slight negative. On a risk-adjusted basis the lower-rated parts of the USD market outperformed, thus our up-in-quality positioning suffered from it. Also our overweight risk in EUR-denominated bonds detracted, as the EUR market underperformed versus the USD one on a risk-adjusted basis. Our underallocation in communications underperformed, as the most junior part of many capital structures in the sector outperformed. Underweight risk in the consumer cyclical sector was the main positive. Avoiding Walgreens was the main positive single-name contributor, as the company is facing cost pressures with a consistent outstanding debt. Commscope and Level 3, two names in the US communications space where we are underweight, were among the main detractors, as their junkiest position rallied over the month. Also, our positioning in Thames Water suffered.

Economic data in the US has continued to paint a picture of a resilient economy. A 'goldilocks' scenario of softer growth, cooling inflation and the prospect of imminent rate cuts remains the broad market consensus. But the tails on either side of this base case cannot be dismissed entirely. In considering the downside (or hard-landing) scenario, we see increasing evidence that consumers are feeling the pinch from higher rates. On the other hand, sticky inflation clearly complicates matters for the Fed. If the market truly begins to consider that rate cuts may be even further out, or even contemplate further hikes, we would again consider this an unfriendly scenario for risk assets. In the high yield market, we see that companies feel the need to reduce debt. This is positive for investors in high yield issuers that have the ability to do that in a creditor-friendly way. However, at the lower end of the spectrum we find companies that can only reduce debt by restructuring their capital structure in a creditor-unfriendly way. This is the environment in which it is important to firmly hold on to our quality tilt and accept a beta below one.