RobecoSAM Climate Global Credits FH 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. 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 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].

Investment grade credit spreads widened modestly, influenced by several factors including the prospect of interest rates remaining higher for longer and a 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 -0.69%. The Solactive Paris Aligned Global Corporate Index' monthly return was slightly negative this month. In the US, 10-year Treasury yields moved up to levels above 4%, despite a rally at the end of the month. The average credit spread on the Paris Aligned Global Corporate Index widened 6 bps to 123 bps at the end of the month. The fund return underperformed its benchmark this month. Our long beta position did not help, as credit slightly underperformed treasuries. However, the US IG corporate market was not that weak, with an excess return close to zero. Our regional underweight in USD and the USA therefore made a negative contribution. Issuer selection overall was a drag on performance, but individual issuer effects were small.

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.