Robeco Euro Credit Bonds DH CHF

Jan Willem de Moor is Portfolio Manager Investment Grade in the Credit team. Prior to joining Robeco in 2005, he worked at the Dutch Medical professionals’ pension fund as an Equity Portfolio Manager and at SNS Asset Management as an Equity Portfolio Manager. Jan Willem has been active in the industry since 1994. He holds a Master's in Economics from Tilburg University. Peter Kwaak is Portfolio Manager Investment Grade in the Credit team. Prior to joining Robeco in 2005, he was Portfolio Manager Credits at Aegon Asset Management for three years and at NIB Capital for two years. Peter has been active in the industry since 1998. He holds a Master’s in Economics from Erasmus University Rotterdam and he is a CFA® charterholder. The Robeco Euro Credit Bonds fundis managed within Robeco’s credit team, which consists of nine portfolio managers and twenty-three credit analysts (of which four financials 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 dedicated quantitative researchers and 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 0.05% 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, 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 5% 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 that are relevant 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 [Index name].

Credit spreads tightened in August, but this tightening was more than offset by an increase in underlying government bond yields. Several countries experienced a decrease in headline inflation, primarily influenced by the decline in energy prices, but core inflation remained elevated. The ECB kept a hawkish stance and raised interest rates by 25 basis points. The inflation situation in the United Kingdom is even worse and the Bank of England surprised markets with a 50 basis points hike. Similarly, the FOMC struck a hawkish tone by indicating that the Fed is a long way from loosening policy, but nevertheless decided to maintain interest rates during its monthly meeting, signaling the first break in policy after 15 months. In Asia, Chinese economic data continued to disappoint, with manufacturing PMIs declining further due to weak external demand and insufficient domestic demand. Also in Europe several forward looking indicators are flagging recession risk. Even though risks are clearly visible, a sense of optimism in risky assets prevailed. This was visible in lower credit spreads, higher equity prices and declining volatility indicators, both in equities and fixed income.

Based on transaction prices, the fund's return was -0.05%. The underlying portfolio outperformed its benchmark index, gross of fees. The benchmark total return was mainly driven by the widening of credit spreads, as the Euro aggregate corporate index widened by 8 basis points to 155 basis points over underlying government bonds. As a result, European corporate bonds underperformed underlying treasuries. Euro government bond yields moved down, with the 10-year German Bund yield decreasing by 3 basis points to 2.46%. Relative performance is attributed to beta positioning and issuer selection, in line with our investment process. The contribution from our beta overweight position was negative during the month, as we maintained a beta well above 1 throughout the course of the month. This was more than offset by the positive contribution from issuer selection. On a sector level, our issuer selection in the banking and consumer cyclical sectors added to our performance this month, while our contribution was negative in basic industry and other financial. At the issuer level, the largest positive contributions came from overweight positions in Permanent TSB, Red & Black Auto Lease France and NIBC Bank.

A buy-on-dips (and sell-the-rally) strategy from a conservative basis remains our preferred approach. Rates and recession fears are the key drivers in this cycle. And although 10-year US yields seem close to the cycle peak, volatility and uncertainty remain. Valuations are still around their long-term average, but are tighter than in earlier years, while financial conditions have tightened further. For now, we have taken some chips off the table. With an outlook of either higher rates or a recession, and valuation in no-man's land, markets are between a rock and a hard place. Technicals remain tough for the period to come. The Fed and ECB continue to be hawkish as inflation remains higher than desired. Both central banks are continuing their quant tightening programs, which are taking liquidity out of the market. In our opinion, it is more important to look at the change in purchasing by central banks, which has become negative. For our investment grade credit portfolios, we brought betas back to around 1.1, whereas the betas of our high yield funds moved below 1.