Robeco All Strategy Euro Bonds I EUR

Jamie Stuttard is Head of the Global Macro team and Portfolio Manager of Robeco Global Total Return Bond Fund and of Robeco All Strategy Euro Bonds. He started at Robeco in 2018. In 2014-2018 Jamie worked at HSBC Bank in London, where was Head of European and US Credit Strategy. Prior to that he held a number of senior fixed income positions at Fidelity Management & Research, Schroder Investment Management and PIMCO Europe. On the buy-side, he has been awarded the Plan Sponsor Europe Fund Manager of the Year award, was twice named as a Financial News Rising Star, won several Lipper Fund awards as well as helping earn Morningstar’s Best Large Fixed Interest House. He started his career at Dresdner Kleinwort Benson in London in 1998. Jamie has a Master’s in History from the University of Cambridge. Stephan van IJzendoorn is Portfolio Manager in Robeco’s Global Macro team. Prior to joining Robeco in 2013, Stephan was employed by F&C Investments as a Portfolio Manager Fixed Income. Before his move to F&C Investments he worked in similar functions at Allianz Global Investors and A&O Services. Stephan started his career in the Investment Industry in 2003. He holds a Bachelor’s in Financial Management, a Master's in Investment Management from VU University Amsterdam and is Certified European Financial Analyst

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, negative screening, ESG integration, limits on investments in companies and countries based on ESG performance as well as engagement. For government and government-related bonds, the fund complies with Robeco’s exclusion policy for countries, excludes the 15% worst ranked countries following the World Governance Indicator 'Control of Corruption', and ensures the fund has a minimum weighted average score of at least 6 following Robeco's proprietary Country Sustainability Ranking. The Country Sustainability Ranking scores countries on a scale from 1 (worst) to 10 (best) based on 40 environmental, social, and governance indicators. For corporate bonds, 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. Lastly, where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.

Government bond yields spiked higher in February, as better-than-expected economic data changed the market narrative, from central bank pivot expectations (so lower rates later in 2023) to now pricing in an increased number of rate hikes in the coming months. The trigger for the sell-off already came early in the month, as US employment stats showed surprisingly strong job and wage growth. Also in Europe, data proved to be more resilient than generally expected. While growth is weakening, it seems a recession is avoided for now, as sharply declining gas prices are supporting consumers. Nonetheless, contrary to initial expectations, core inflation in Europe rose again over January. The better-than-expected data has boosted hawkish Fed and ECB expectations and especially front-end yields suffered. The yield on the 2-year German Schatz rose nearly 50 bps from 2.65% at the end of January to 3.14% at the end of February.

Based on transaction prices, the fund's return was -2.68%. The fund posted a negative absolute return over the month, below its index. Bond yields rose sharply as both economic data and core inflation surprised to the upside, meaning central banks will need to continue tightening monetary policy in the coming months. For the ECB, more than 125 bps of hikes are now priced in, and nearly all rate cuts that where expected for next year have been priced out. The main detractor from performance was the overweight duration position. As we are getting closer to the end of the tightening cycle, we will continue to gradually further scale into duration and curve steepeners in the coming months. We remain cautious towards peripheral bonds, as, besides large issuance pressures and tight valuations, the ECB has started with (passive) QT from March on. It is likely that the amount of QT will be increased in July, putting further pressure on spreads.

Stronger-than-expected economic data has shifted rate expectations higher. We expect that the ECB will hike rates 2 to 3 more times in the coming months. In addition, we expect 3 additional Fed hikes (March, May and June). This would bring the Fed funds rate from the current 4.50-4.75% band to a 5.25-5.50% band. In this changed narrative we have taken a slightly more cautious approach on when to add to duration. We expect more clarity on when the policy rate level will peak this cycle later in spring. Nonetheless, we continue to expect a more favorable environment for rates later this year. This implies a re-steepening of yield curves as well.