Robeco Euro Government Bonds Z EUR

Michiel de Bruin is Head of Global Macro and Portfolio Manager. Prior to joining Robeco in 2018, Michiel was Head of Global Rates and Money Markets at BMO Global Asset Management in London. He held various other positions before that, including Head of Euro Government Bonds. Before he joined BMO in 2003, he was, among others, Head of Fixed Income Trading at Deutsche Bank in Amsterdam. Michiel started his career in the industry in 1986. He holds a post graduate diploma investment analyses from the VU University in Amsterdam and is a Certified EFFAS Analyst (CEFA) charterholder. He holds a Bachelor’s in Applied Sciences from University of Applied Sciences in Amsterdam. Stephan van IJzendoorn is Portfolio Manager and member of Robeco’s Global Macro team. Prior to joining Robeco in 2013, Stephan was employed by F&C Investments as a Portfolio Manager Fixed Income and worked in similar functions at Allianz Global Investors and A&O Services prior to that. Stephan started his career in the Investment Industry in 2003. He holds a Bachelor’s in Financial Management, a Master's in Investment Management from VU University Amsterdam and is Certified European Financial Analyst (CEFA) 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.

The fund incorporates sustainability in the investment process via exclusions, negative screening, ESG integration and a minimum average country sustainability ranking score as well as a minimum allocation to ESG-labeled bonds. The fund complies with Robeco's exclusion policy for countries and does not invest in countries where serious violations of human rights or a collapse of the governance structure take place, or if countries are subject to UN, EU or US sanctions. In addition, the fund excludes the 15% worst ranked countries following the World Governance Indicator 'Control of Corruption'. ESG factors of countries are integrated in the bottom-up country analysis. In the portfolio construction the fund ensures a minimum weighted average score of 6.5 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. Lastly, the fund invests in a minimum of 10% in green, social, sustainable and/or sustainability-linked bonds.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: Treasury.

August was a very positive month for nearly all government bond markets. Especially short maturity government bond yields declined. 2-year US Treasury yields fell by 34 basis points to 3.92% while the 10-year bond yield fell by 13 basis points to 3.90%. The 2 and 10-year German government bonds also rallied by 14 and 1 basis point, respectively. August begun with a large risk-off move as markets responded to a weak US labor market report and uptick in the unemployment rate. These moves were exacerbated in Japan as the BoJ had also raised its policy rate to 0.25%. Risk markets recovered in the following days. Fed chair Powell held a dovish speech at the Jackson Hole symposium in which he confirmed the need to reduce policy rates and limit any further cooling in the US labor market. In the Eurozone, inflation data was largely in line with expectations and data from the ECB on wage negotiations showed a slower pace of wage growth over the second quarter. Italian government bond spreads to Germany slightly widened to 140 basis points.

Based on transaction prices, the fund's return was 0.59%. The return of the fund was positive and the fund outperformed its index considerably. The overweight duration position and curve steepening position both contributed to performance, as markets priced in more rate cuts, particularly for the Fed, which impacted yields globally. Especially shorter-dated bonds benefited in this environment, with the curve gradually normalizing from very inverted levels. The market is supported by expectations of further rate reductions by the ECB in the coming quarters but also the Fed is expected to cut rates in September. Country spreads also added to performance, as Italian government bond spreads widened somewhat over the month. In addition, positions in the SSA complex added to performance. Government-related bond spreads tightened again after the initial sharp deterioration in risk sentiment seen at the start of August. The overweight in front-end Norway contributed as the curve, which has been lagging the steepening moves seen in other regions, started to price in an increased number of rate cuts.

Economic growth remains downbeat in the Eurozone and the labor market continues to cool in the US. Both lead to a reduction in inflationary pressures going forward and it is becoming evident that high policy rates are not required any more. Most central banks around the world have already started to reduce the restrictiveness of their policy stance and the Fed is expected to follow suit at the September FOMC meeting. As such, the discussion is shifting from when rates should be cut towards how much should they be cut. Yield curves have steepened significantly over the past months and we expect them to continue to steepen throughout the easing cycle. We have shifted some of our steepening exposure from the 5-year to the 2-year maturity government bonds as they tend to perform best in an easing cycle. We remain cautious on France due to its political instability, upcoming government budget negotiations and large issuance requirements.