Robeco Sustainable Asian Bonds F USD

Based in Singapore, Thu Ha Chow is Head of Fixed Income Asia and Portfolio Manager with a focus on Asian credits. Prior to joining Robeco in 2022, she was Portfolio Manager and Asia Strategist at Loomis Sayles & Co and Head of Asian Credit at Aberdeen Asset Management, both in Singapore. Previously Thu Ha worked for 15 years in London where she held senior fixed income positions at Deutsche Asset Management and Threadneedle Asset Management in addition to 3 years in investment banking at Credit Suisse First Boston. She started her career in 1998 after obtaining a Master’s in Economics and Philosophy from London School of Economics. Frank Reynaerts is an Analyst Asian Credit in the Credit team. Previously, Frank joined Robeco in 2011 as a Portfolio Manager Emerging Debt. Prior to that, he was Portfolio Manager Investment Grade Credits at Syntrus Achmea, Portfolio Manager Emerging Debt at Lombard Odier and Portfolio Manager Fixed Income at Fortis. Frank started his career in 1997 at ASLK Bank as a Risk Analyst. He holds a Master’s in Commercial and Financial Sciences from EHSAL Business School of Brussels and he is a CFA® charterholder. Reinout Schapers is Portfolio Manager Investment Grade in the Credit team. Prior to joining Robeco in 2011, Reinout worked at Aegon Asset Management where he was a Head of European High Yield. Before that, he worked at Rabo Securities as an M&A Associate and at Credit Suisse First Boston as an Analyst Corporate Finance. Reinout has been active in the industry since 2003. He holds a Master's in Architecture from the Delft University of Technology.

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.

The fiscal consequences of investing in this fund depend on the investor's personal situation. For private investors in the Netherlands real interest and dividend income or capital gains received on their investments are not relevant for tax purposes. Each year investors pay income tax on the value of their net assets as at 1 January if and inasmuch as such net assets exceed the investor’s tax-free allowance. Any amount invested in the fund forms part of the investor's net assets. Private investors who are resident outside the Netherlands will not be taxed in the Netherlands on their investments in the fund. However, such investors may be taxed in their country of residence on any income from an investment in this fund based on the applicable national fiscal laws. Other fiscal rules apply to legal entities or professional investors. We advise 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.

Sustainability is incorporated in the investment process by the means of a target universe, exclusions, ESG integration, and a minimum allocation to ESG-labeled bonds. The fund invests in credits issued by companies with a positive, neutral or low negative impact on the SDGs. The exposure to credits issued by companies with a low negative impact is at max 20% and the average SDG score of the fund must be greater than zero. The impact of issuers on the SDGs is determined by applying Robeco's internally developed three-step SDG Framework. The outcome is quantified with a proprietary SDG score methodology, considering both the contribution to the SDGs (positive, neutral or negative) and the extent of this contribution (high, medium or low). In addition, 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. Furthermore, the fund invests at least 5% in green, social, sustainable, and/or sustainability-linked bonds. Lastly, where a credit issuer is flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to exclusion.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 JP Morgan Asia Credit Index.

In October, Asian Credit's return was -0.65%, driven by higher Treasury yields, while credit remained stable. In China, the economy has started to show some signs of stabilization, driven by the nationwide measures to support the property sector and the piecemeal monetary easing. The economy grew 4.9% in the third quarter compared with a year earlier and is on track to meet the government's target of 5% for 2023. Nevertheless, confidence in the Chinese property market remains fragile. The US economy remained resilient in October, driven by a tight labor market. Some members of the rate-setting committee indicated that the rise in long-term interest rates makes another rate hike less necessary. The 'higher for longer' interest rate environment remained the main theme. After a brief decline in yields driven by the Israel-Hamas conflict, 10-year US Treasury yields rose around 36 basis points, while 2-year yields rose only 4 basis points. As a result, the interest rate curve continued its bear steepening in October. Medco Energi, a small Indonesian energy company with a high yield rating successfully printed a 5.5-year USD bond, a rare issuance in the Asian high yield bond market.

Based on transaction prices, the fund's return was -1.03%. The total return of the index on the month was -0.65% and that of the fund was -0.95%, lagging the index by 30 bps. Within country selection, active overweights in South Korea and Indonesia added to performance. Within sectors, the underweight in sovereigns contributed negatively to the fund's performance. We express our cautious stance on Chinese property via a sector underweight. This added to performance, but was more than offset by issuer selection.

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. This is precisely the time to remain cautious. Historically, significant monetary tightening cycles have always resulted in a recession, only the time lag has differed. And this has been the sharpest rate rise in decades. Lower-rated companies will soon start to feel the bite of higher interest rates. We continue to be defensive in the weak single-B and below rated segment. Europe and China are in a weaker spot. Europe is a net importer of energy and German exports have a high dependence on China. Without more significant stimulus, the Chinese economy will recover only slowly post-Covid-19. This makes the outlook for many commodities less attractive. While valuations of Asian credit are still around the long-term average, they have tightened from levels seen late last year, with investment grade sovereign issuers screening more expensively than their corporate counterparts. We maintain a portfolio beta around neutral.