RobecoSAM US Green Bonds SEH 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. 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. 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. Joost Breeuwsma is Portfolio Manager Investment Grade in the Credit team. Prior to starting his career and joining Robeco in 2017, he obtained a Master’s with Distinction in Financial Mathematics from King’s College London.

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’s sustainable investment objective is to invest in green bonds. Green bonds are bonds that are recognized as such by external sources and which proceeds are used to finance or re-finance in part or in full new and/or existing environmentally-friendly projects. The green bond selection is based on external data or an internally developed five-step Green bond framework. The five-step framework states that the issuer's green bond framework must be aligned with market standards related to green bonds such as such as the ICMA Green Bond Principles. Next, the allocation of the investment proceeds must contribute to at least one of the six objectives of the EU Taxonomy nor do any significant harm to the other five. The six objectives of the EU Taxonomy Regulation are climate change mitigation and adaptation, sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection of healthy ecosystems. The third and fourth steps require that the bond issuer reports on the use of proceeds and that the issuance aligns with the wider sustainability strategy of the issuer. The fifth and last step states that the issuer must respect international norms related to conduct such as international labor rights, human rights and the UN Global Compact. In addition, the investment process also takes into account exclusions following Robeco's exclusion policy and integrates financially material ESG factors in the bottom-up issuer analysis to assess the impact on the issuer's fundamentals. 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 MSCI US Green Bond Index.

October was a weak month for credit markets, with credit spreads widening during the month. The conflict in the Middle East that started with the attack carried out by Hamas on Israel on 7 October dominated news headlines. The event raised concerns about a broader conflict and commodities like oil and gold traded higher during the month. Most companies reported decent quarterly earnings, although many companies reported that economic activity is decelerating. In the US, GDP increased due to healthy consumer spending. Labor markets in the US continue to be strong and employment costs continued to rise. On top of that, investors are concerned about the US funding gap, debt ceiling discussions and the new House speaker Mike Johnson. Treasury yields continued to rise. In Europe, macro data was weaker, with Q3 GDP showing a minor contraction. On a positive note, Eurozone inflation data dropped to a two-year low. In Japan, the BoJ made only minor changes to its policy settings, leading to a weaker yen.

Based on transaction prices, the fund's return was -1.17%. The return of the fund was negative in October, as US bond yields rose considerably again. The fund outperformed its index (gross of fees). The yield-curve steepener position in the fund benefited performance, as especially long-dated bonds sold off. The underweight in Japan also benefited performance, as the BoJ is forced to normalize policy further. Nonetheless, the outright long-duration position detracted. The index credit spread widened 4 basis points to 0.99%. The underweight beta risk positioning contributed slightly positively to performance, as spreads widened. Issuer selection made a strong contribution towards the outperformance; subordinated bonds and the banking sector added. Companies that contributed the most were overweight positions in Raiffeisen Bank, Virgin Media and Munich Re.

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. We argue that this is precisely the time to remain cautious. The US economy has been remarkably resilient despite the sharpest hiking cycle in decades. The factors that caused the lag in monetary policy transmission have now largely played out. The European economy has not enjoyed the same fiscal impulse and is not immune to weakness in China, a key trading partner. The Chinese economy has shown outright signs of weakness and the level of monetary and fiscal support has been underwhelming. Hence we are slightly long beta in investment grade and conservatively positioned in high yield. Within investment grade markets we see banks offering the best value. Senior banking paper continues to trade wider than the historical average. European credit spreads are trading wider than their US counterparts. In EM, we continue our cautious stance on the riskiest countries including China.