RobecoSAM Climate Global Bonds IH 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 0.01% 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.

Sustainability is incorporated in the investment process via exclusions, ESG integration, a minimum allocation to ESG-labeled bonds as well as a carbon footprint target for both the government bond component and the credits component. For government bonds, the fund complies with Robeco’s exclusion policy for countries. For credits, the fund does not invest in companies that are in breach of international norms and applies the activity-based exclusions of Article 12 of the EU regulation on Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks through exclusions as per Robeco’s exclusion policy. ESG factors, including climate change, are integrated in the bottom-up security analysis to assess the decarbonization potential and the impact of financially material ESG risks on the issuer's fundamental quality. Furthermore, the fund invests at least 2.5% in green, social, sustainable, and/or sustainability-linked bonds. In the portfolio construction the fund targets carbon footprints at least equal to or better than the government bond component and the credit component of the Solactive Paris Aware Global Aggregate Index, respectively. This is to ensure the fund is aligned with the desired decarbonization trajectory of an average 7% year on year.

Global bond yields ended the month of April at similar levels as in March. Nonetheless, bond market volatility remained very high. In the US, 10-year Treasuries traded within a 3.3% to 3.6% range, ending the month at 3.42%. US government bonds rallied at the beginning of the month, as the ISM Manufacturing Index and job openings came in below expectations. In Europe, front-end German bond yields traded in a 2.5% to 3.0% range. On the last day of the month, bonds rallied strongly, with the 2-year German yield dropping 14 bps to 2.69%. Demand for bonds was boosted by lower-than-expected Eurozone GDP growth and German inflation surprising on the downside. Even as fears around banking stress seemed to subside, the 2-year BTP-Bund spread widened 15 bps to 62 bps. Spreads widened on supply pressures and expectations that the ECB will increase its QT pace in the summer.

Based on transaction prices, the fund's return was -0.05%. The fund posted a positive absolute return in April as interest rates fell. The fund's steepener positions in the United States added significantly to performance, while the contribution from duration was negative. Credit and EMD detracted from performance given the tightening of corporate bond spreads versus Euro swap spreads. FX detracted from performance as the yen traded a bit weaker.

Given the still elevated core inflation, many central banks will likely keep a tightening bias. In our baseline scenario, the Fed will hike once more in May, while for the ECB we expect at least a hike in both May and June. However, weakening growth, falling headline inflation and the fallout from the banking stress indicate that tightening cycles are in their final stages. History suggests that this bodes well for long duration positions over the medium term. We therefore gradually continue to scale into duration. Against the backdrop of ECB QT and weak economic growth, peripheral EGBs might struggle to continue to perform, especially versus swaps given their already stretched valuations.