Robeco Global Total Return Bond Fund DH EUR

Jamie Stuttard is Head of the Global Macro team and Portfolio Manager of Robeco Global Total Return Bond Fund and of Robeco All Strategy Euro Bonds. He started at Robeco in 2018. In 2014-2018 Jamie worked at HSBC Bank in London, where was Head of European and US Credit Strategy. Prior to that he held a number of senior fixed income positions at Fidelity Management & Research, Schroder Investment Management and PIMCO Europe. On the buy-side, he has been awarded the Plan Sponsor Europe Fund Manager of the Year award, was twice named as a Financial News Rising Star, won several Lipper Fund awards as well as helping earn Morningstar’s Best Large Fixed Interest House. He started his career at Dresdner Kleinwort Benson in London in 1998. Jamie has a Master’s in History from the University of Cambridge. Bob Stoutjesdijk is Portfolio Manager of Robeco Global Total Return Bond Fund, Strategist and member of Robeco’s Global Macro team. He joined Robeco in 2019. He worked at Shell Asset Management Company as Portfolio Manager Fixed Income Sovereign Credit in the period 2011-2019. Prior to that, he was Portfolio Manager Fixed Income at SNS Asset Management. He started his career as Quantitative Analyst at APG Asset Management in 2008. Bob has a Master’s in Economics & Business from Erasmus University Rotterdam and is a CAIA® charterholder.

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.

The fund incorporates sustainability in the investment process via exclusions, negative screening, ESG integration, limits on investments in companies and countries based on ESG performance as well as engagement and a minimum allocation to ESG-labeled bonds. For government and government-related bonds, the fund complies with Robeco’s exclusion policy for countries, excludes the 15% worst ranked countries following the World Governance Indicator 'Control of Corruption', and ensures investments have a minimum weighted average score of 6 following Robeco's proprietary Country Sustainability Ranking. The Country Sustainability Ranking scores countries on a scale from 1 (worst) to 10 (best) based on 40 environmental, social, and governance indicators. For corporate bonds, 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. 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. Where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement. Lastly, the fund invests in a minimum of 2.5% in green, social, sustainable and/or sustainability-linked bonds.

Government bond yields spiked higher in February, as better-than-expected economic data changed the market narrative, from central bank pivot expectations (so lower rates later in 2023) to now pricing in an increased number of rate hikes in the coming months. The trigger for the sell-off already came early in the month, as US employment stats showed surprisingly strong job and wage growth. Also in Europe, data proved to be more resilient than generally expected. While growth is weakening, it seems a recession is avoided for now, as sharply declining gas prices are supporting consumers. Nonetheless, contrary to initial expectations, core inflation in Europe rose again over January. The better-than-expected data has boosted hawkish Fed and ECB expectations and especially front-end yields suffered. The yield on the 2-year German Schatz rose nearly 50 bps from 2.65% at the end of January to 3.14% at the end of February. In the US, 2-year Treasury Note yields even increased by 60 bps, from 4.20% to 4.82%.

Based on transaction prices, the fund's return was -2.73%. The fund posted a negative absolute return in February as interest rates rose. The fund's steepener positions in the United States detracted from performance, and the contribution from duration was also negative. Credit marginally detracted from performance, given small tightening of corporate bond spreads versus euro swap spreads. FX was neutral to performance.

Stronger-than-expected economic data has shifted rate expectations higher. We expect that the ECB will hike rates 2 to 3 more times in the coming months. In addition, we expect 3 additional Fed hikes (March, May and June). This would bring the Fed funds rate from the current 4.50-4.75% band to a 5.25-5.50% band. In this changed narrative we have taken a slightly more cautious approach on when to add to the duration overweight. We expect more clarity on when the policy rate level will peak this cycle later in spring. Nonetheless, we continue to expect a more favorable environment for rates later this year. This implies a re-steepening of yield curves as well. Uncertainty around Italy will remain elevated, as growth is expected to decline, while debt servicing costs are rising fast. Even as the new coalition seems stable for now, political risks are always around the corner in Italy.