RobecoSAM Climate Global Credits FH EUR

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. 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 RobecoSAM Climate Global Credits is 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.

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 contribute to keeping global temperature rise well-below 2°C by reducing the carbon footprint of the fund. Climate change and sustainability considerations are incorporated in the investment process via exclusions, ESG integration, a minimum allocation to ESG-labeled bonds and a carbon footprint target. The fund does not invest in companies that are in breach of international norms and applies the activity-based exclusions of Article 12 of the EU regulation on Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks as per Robeco’s exclusion policy. ESG factors, including climate change, are integrated in the bottom-up security analysis to assess the decarbonization potential and the impact of financially material ESG risks on the issuer's fundamental credit quality. Furthermore, the fund invests at least 5% in green, social, sustainable, and/or sustainability-linked bonds. In the portfolio construction the fund targets a carbon footprint at least equal to or better than the Solactive Paris Aligned Global Corporate Index. This is to ensure the fund is aligned with the desired decarbonization trajectory of an average 7% year on year.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 Solactive Paris Aligned Global Corporate Index.

Investment grade credit spreads widened somewhat during October, as the higher-for-longer narrative on interest rates continued to weigh on markets. The average credit spread on the Paris Aligned Global Investment Grade Corporate Bond Index widened 8 bps to 133 bps at the end of the month. The attacks carried out by Hamas on Israel on 7 October added to the risk-off sentiment in markets. The event raised concerns about a broader conflict, leading to increased prices for commodities such as oil. Most companies reported decent quarterly earnings, although many companies reported that economic activity is decelerating. In the US, third-quarter GDP was quite strong due to healthy consumer spending. Labor markets in the US continue to be strong and employment costs continued to rise. As a result, Treasury yields continued to rise, with the US 10-year yield trading briefly above 5% on 23 October. 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. The ECB decided to keep policy rates on hold. It will continue to reinvest redemptions from the PEPP asset purchase program.

Based on transaction prices, the fund's return was -1.29%. The Solactive Paris Aligned Global Corporate Index' monthly return was negative this month, mainly driven by rising interest rates. The German government 10-year yield was more or less unchanged at the end of the month at around 2.80%. The US Treasury 10-year yield increased more than 30 bps to 4.93% at the end of the month. The US Treasury curve continued to steepen and is now much less inverted than it was during the last twelve months. The index return was -1.03% (GBP hedged) this month. The fund performed in line with the index with a -1.05% total return (GBP hedged). Our top-down beta position made a small negative contribution this month. Credit spreads widened somewhat, and corporate bonds underperformed treasuries as a result. Issuer selection made a positive contribution to performance. Positive contributions came from subordinated debt and the banking sector, which did particularly well. We had overweight positions in Raiffeisen Bank, Deutsche Bank and Barclays PLC.

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. We stick to a small overweight beta in investment grade, with a more conservative positioning in high yield. Within investment grade markets we see banks offering the best value. European credit spreads are more attractive than their US counterparts. In EM, we continue our cautious stance on the riskiest countries including China.