Robeco Sustainable Asian Bonds I USD

Based in Singapore, Thu Ha Chow is Head of Fixed Income Asia and Portfolio Manager with a focus on Asian credits. Prior to joining Robeco in 2022, she was Portfolio Manager and Asia Strategist at Loomis Sayles & Co and Head of Asian Credit at Aberdeen Asset Management, both in Singapore. Previously Thu Ha worked for 15 years in London where she held senior fixed income positions at Deutsche Asset Management and Threadneedle Asset Management in addition to 3 years in investment banking at Credit Suisse First Boston. She started her career in 1998 after obtaining a Master’s in Economics and Philosophy from London School of Economics. Reinout Schapers is Co-Head Portfolio Management 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 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.

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 invests in credits issued by companies with a positive, neutral or low negative impact on the SDGs. The exposure to credits issued by companies with a low negative impact is at max 20% and the average SDG score of the fund must be greater than zero. The impact of issuers on the SDGs is determined by applying Robeco's internally developed three-step SDG Framework. The outcome is quantified with a proprietary SDG score methodology, 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. Financially material ESG factors are integrated in the bottom-up security analysis to assess the impact on the issuer's fundamental credit quality. Furthermore, the fund invests at least 5% 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.

Asian Credit's return was 0.89%. Positive total returns were driven by falling Treasury yields and tighter spreads in investment grade. Volatility came down in April, after an eventful month of March, but markets still struggled to find a clear direction. Recession fears are still present for developed markets and investors also worry about sticky inflation. In many emerging markets, this inflation pressure is more absent and this could give central banks room to start lowering rates ahead of their developed market peers. Within emerging markets, Asia remains relatively strong and the new issue market remains open, although largely for high grade issuers. A remarkable debutant was Pertamina Geothermal Energy with a 5-year green bond. This subsidiary of Pertamina is an important part of the group's decarbonization strategy.

We expect a recession in the US and Europe could start towards the end of the year, caused by a fast and aggressive central bank hiking cycle. The Federal Reserve is likely to have finished hiking rates and could be set to pause for a longer period than markets expect. Recent events in the banking sector will lead to a further tightening of lending standards. Concerns are about US interest-sensitive and leveraged asset classes like leveraged loans and commercial real estate, especially offices. The reopening of China post-Covid 19 is progressing faster than anticipated, but is more beneficial to the domestic services sector and the Asian region than to the global economy. Also China's outbound international tourism has not returned to pre-pandemic levels. Within this environment, we prefer higher-quality credit as it should be more resilient to a global economic downturn.