RobecoSAM Euro SDG Credits F EUR

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 RobecoSAM Euro SDG Credits 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.

Investors outside Luxembourg are subject to their national tax regime applying to foreign investment funds. We advise individual investors to contact their financial or fiscal adviser regarding their specific fiscal situation.

Sustainability is incorporated in the investment process by the means of a target universe, exclusions, ESG integration, and a minimum allocation to ESG-labeled bonds. The fund solely invests in credits issued by companies with a positive or neutral impact on the SDGs. The impact of issuers on the SDGs is determined by applying Robeco's internally developed three-step SDG Framework. The outcome is a quantified contribution expressed as an SDG score, considering both the contribution to the SDGs (positive, neutral or negative) and the extent of this contribution (high, medium or low). In addition, 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. ESG factors are integrated in the bottom-up security analysis to assess the impact of financially material ESG risk on the issuer's fundamental credit quality. Furthermore, the fund invests at least 10% in green, social, sustainable, and/or sustainability-linked bonds. Lastly, where a credit issuer is flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to exclusion.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: Corporates.

During October, credit spreads remained relatively stable, contrasting with declines seen in other risky assets. The prevailing risk-off sentiment stemmed from several underlying factors, with the primary catalyst being increasing consensus that interest rates will stay higher for longer. Concerns on inflation remained at the forefront, especially after WTI surpassed USD 90 per barrel after continued voluntary production cuts by Saudi Arabia and Russia. The ECB delivered yet another 25 bps hike, bringing the deposit rate to a record high of 4.0%. Meanwhile, both the Fed and the BoE delivered a hawkish pause. Yields not only moved higher across the curve, but there was also a clear steepening. Eurozone Q2 GDP was revised to 0.1% QoQ, indicating economic stagnation. September PMIs are still below 50, with the services PMI up to 48.4, but future expectations fell, hinting at upcoming PMI declines. In China, activity data for August published in September brought further signs that the economy is stabilizing, following four months of slowing momentum. Piecemeal monetary easing continued, with the PBoC cutting the reserve requirement ratios for banks for the second time this year.

Based on transaction prices, the fund's return was 0.49%. The underlying portfolio outperformed its benchmark index, gross of fees. The primary driver of the benchmark's return was the decline in underlying government bond yields. Specifically, the 10-year German Bund yield decreased by 3 basis points, and the 5-year German government bond yield, which more closely mirrors the benchmark duration, was 12 basis points lower. In contrast, credit spreads widened, with the Euro aggregate corporate index ending the month 7 basis points higher at 160 basis points above underlying government bonds. Relative performance is attributed to beta positioning and issuer selection, in line with our investment process. Our beta overweight position had a slightly negative impact during the month, as index spreads widened while we maintained a beta position above one throughout the period. The majority of the excess return came from our significant positive issuer selection contribution, particularly in the banking sector and from overweight positions in International Flavors & Fragrances, NIBC Bank and Thermo Fisher Scientific.

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. This comes on top of the geopolitical risk already present with the war in Ukraine. The Chinese economy has shown outright signs of weakness and the level of monetary and fiscal support has been underwhelming. China faces similar challenges that resemble Japan's experience after 1990. 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.