Sustainable Pension Income X EUR

Reinout Schapers is Portfolio Manager Investment Grade in the Credit team. Prior to joining Robeco in 2011, Reinout worked at Aegon Asset Management where he was a Head of European High Yield. Before that, he worked at Rabo Securities as an M&A Associate and at Credit Suisse First Boston as an Analyst Corporate Finance. Reinout has been active in the industry since 2003. He holds a Master's in Architecture from the Delft University of Technology.

The fund is established in the Netherlands. The fund is closed for corporate-income tax purposes (fiscally transparent). This means that all results are attributed directly to the participants. As a consequence, the fund is not liable to corporate-income tax and withholds no dividend tax.

The fund invests a minimum of 80% in other Robeco managed or externally managed funds which are classified under Article 8 or 9 of SFDR and either promote environmental or social characteristics or have sustainable investment as their objective. Sustainability is thus an important considerations in the fund selection. 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].

In August, credit spreads widened modestly, influenced by several factors including the prospect of interest rates remaining higher for longer and a continued softening of economic data, particularly in Europe and China. In the US, noteworthy events included the decision by Fitch Ratings to downgrade the US credit rating from AAA to AA+, the Federal Reserve's Jackson Hole Conference speech emphasizing the necessity for additional tightening measures to address inflation concerns, and the release of JOLTS job vacancy data for July, which came in softer than expected. In Europe, there were growing economic concerns as the August flash PMIs revealed a significant decline, with the Eurozone composite PMI dropping to 47.0, the lowest since late 2020, and the UK's composite PMI contracting to 47.9, the first since January. Despite these challenges, European inflation remained resilient. In China, concerns around the economy persisted, while headwinds in the property sector intensified following Country Garden's missed bond payments. Consequently, the PBoC continued with piecemeal easing, including another policy rate cut and substantial liquidity injections into the banking system.

Based on transaction prices, the fund's return was 0.38%. The Global Aggregate Corporate Bond Index returned -0.57% (hedged in euro) this month. Excess returns for the index were -0.13%. The credit spread on the Bloomberg Global Aggregate Corporate Bond Index widened 5 basis points to 133 basis points for the month. German 10-year yields tightened by 2 basis points to 2.49%, and US 10-year yields widened by 15 basis points to 4.11%. The underlying fund underperformed to the index. Our top-down position contributed neutrally to our performance. Our issuer selection detracted from our performance. In general, euro cash bonds underperformed USD cash bonds, driven by financials. resulting in a negative contribution from our overweight euro financial bond positioning. Negative SDG-rated issuers performed better than positive SDG-rated issuers. Companies that contributed negatively to our performance were: Deutsche Bank, Cellnex Telecom SA, and CaixaBank SA.

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.