Robeco Corporate Hybrid Bonds IH USD

Daniel Ender is Portfolio Manager Investment Grade in the Credit team. Previously, he was a Credit Analyst at Actiam. Daniel started his career in the industry in 2018 at ABN AMRO. He has a Master’s in Financial Economics from Erasmus University Rotterdam and a Bachelor’s in Political Science and Economics from the University of Connecticut. Daniel also is CFA® charterholder. 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. Patrick Bawlf is Portfolio Manager Investment Grade in the Credit team. Previously, he was Analyst, responsible for covering the Utilities sector within the Credit team. Prior to joining Robeco in 2017, Patrick worked at Mizuho as Head of Corporate Credit research. Before that, he headed the Credit Desk Analyst team at Nomura and the Credit Trading Desk Analyst team at Lehman Brothers, targeting opportunities in distressed, high yield and the investment grade credit universes. Earlier in his career, Patrick worked in corporate finance with Deutsche Bank and accounting with KPMG, where he attained his Chartered Accountant designation. He has been active in the industry since 1995 and holds a Bachelor's in Economics from the University of British Columbia. The Robeco Corporate Hybrid Bonds fund is managed within Robeco’s credit team, which consists of nine portfolio managers and twenty-three credit 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 three dedicated quantitative researchers and four 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 0.01% 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, 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 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 Global Corporate Hybrids 3% Issuer Cap.

August saw significant volatility in global financial markets, triggered by a weak US jobs report that raised fears of a potential economic downturn. The VIX briefly surged to March 2020 levels, while Japan's TOPIX dropped over 12% in a single day amidst a sharp unwinding of global carry trades. Credit spreads widened by more than 20 basis points in just a few sessions. Despite initial turmoil, investor sentiment improved after positive data and a dovish speech from Fed Chair Powell, driving a recovery in both US equities and government bonds. Most government bond markets had a strong month, with short-term bond yields declining – 2-year US Treasury yields dropped by 34 basis points to 3.92%, and 10-year yields fell by 13 basis points to 3.90%. German government bonds also rallied, with 2 and 10-year yields decreasing by 14 and 1 basis point, respectively. Both USD and EUR primary markets saw record-high issuance volumes during August, driven by strong investor demand for new deals to lock in relatively high yields. This demand has led to deals being priced with minimal or no new issue concessions, underscoring the continued heightened interest in corporate bonds.

Based on transaction prices, the fund's return was 1.15%. Last month, the Global Corporate Hybrids Index had a total return of 1.09% (hedged to EUR), with the index tightening by 2 basis points to 193 basis points. The positive return was driven by tighter spreads, carry return and lower underlying government bond yields. Indeed, the yields on underlying government securities narrowed over the month, including a 1-basis point decline in German 10-year yields and a 13-basis point drop in the 10-year US Treasury yield, reaching 2.29% and 3.90%, respectively. The underlying portfolio outperformed its benchmark index before fees. Relative performance is attributed to beta positioning and issuer selection, in line with our investment process. The positive beta contribution resulted from the beta being above one while index spreads tightened slightly. Currency allocation played a significant role in August, benefiting from our euro overweight and dollar risk underweight. Additionally, our overweight in BB-rated bonds proved advantageous. On a ticker level, Bayer was the largest positive contributor, benefiting from a court circuit split in its glyphosate litigation, increasing the likelihood of review by the US Supreme Court.

We aim for a portfolio beta above one in corporate hybrids. Current yield and spread levels look attractive, especially for investment grade corporate issuers. Corporate hybrids offer a sizeable yield pickup and are mainly issued by large-cap, high-quality companies. These investment grade issuers are well-positioned to handle any soft or hard landing, given their size and diversification.