Robeco Corporate Hybrid Bonds IH USD

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 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.

The Global Corporate Hybrids Index posted a total return of -0.36% last month (EUR hedged). The index widened by 13 basis points, reaching a level of 254 basis points. The main catalyst for the risk-off sentiment was the conflict in the Middle East initiated by the attack carried out by Hamas on Israel on 7 October. The event raised concerns about a broader conflict, leading to increased prices for commodities such as oil and gold 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 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 2-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 -0.23%. The underlying portfolio outperformed its benchmark index, gross of fees. Relative performance is attributed to beta positioning and issuer selection, in line with our investment process. Beta positioning contributed to most of this month's outperformance, as beta was well above one during the month, while spreads tightened meaningfully. At the issuer level, the large overweight positions in EDF and BHP Billiton made positive contributions. We also benefited from being underweight in names such as Adecco Group, Sempra Energy and Dominion Energy. These gains were partially offset by negative contributions from overweights in TC Energy Corp and Southern Co.

We aim for a portfolio beta above one in corporate hybrids. Spreads had recovered from the very wide levels seen last year, but the weakness in the financial sector led to higher spread levels again. Current yield levels at 6-7% look very attractive, for investment-grade corporate issuers. Corporate hybrids offer a significant yield pickup and are issued by large, high-quality companies. These investment-grade issuers are well positioned to handle any slowdown in economic growth, given their size and diversification.