Robeco High Yield Bonds IH EUR

The global high yield market started off strong in October, but came under some pressure towards month-end, resulting in a total return of around 0.5%. The month started with bond prices rallying on the back of hopes for a vaccine and expectations of another large US stimulus bill. As October progressed, the number of infections rose quickly in Europe, which led to tougher restrictions and lockdowns. Uncertainty regarding the US elections weighed on investor sentiment and spreads started to trend wider. Oil prices also reacted heavily and moved down 10%. Gross monthly high yield issuance decreased compared to previous months and in the end USD 34 billion of new deals entered the index. Mallinckrodt and Gulfport Energy defaulted in October, affecting USD 1.8 billion of debt. High yield reported strong inflows following outflows in September. The market demonstrated a wide dispersion in performance on a sector level, where industries that were heavily impacted by Covid-19, like transportation and retail, outperformed. Spreads finished the month 5 bps tighter at a level of 505 bps. The average yield to worst of the global high yield index ended the month at 5.47%.

All currency risks are hedged.

Robeco High Yield Bonds make use of derivatives for hedging purposes as well as for investment purposes. These derivatives are very liquid.

The fund does not distribute dividend. The income earned by the fund is reflected in its share price. The fund's entire result is thus reflected in its share price development.

Our analysis of issuers goes beyond the traditional financial factors and includes the issuers’ performance on ESG factors. We deem it essential for a well-informed investment decision to take into account those ESG factors that have the potential to materially impact the financial performance of the issuer. This perfectly matches the basic need to avoid the losers in credit management, as many credit events in the past can be attributed to issues such as poorly designed governance frameworks, environmental issues, or weak health & safety standards. The aim of ESG integration is to improve the risk/return profile of the investments and does not have an impact goal. ESG analysis is fully integrated in the bottom-up security analysis. We have defined key ESG factors per industry, and for every company we analyze how the firm is positioned versus these key ESG factors, and how this impacts the fundamental credit quality.

Robeco High Yield Bonds invests in corporate bonds with a sub-investment grade rating, issued primarily by US and European issuers. The portfolio is broadly diversified with a structural bias to the higher rated part in high yield (BB/B). Performance drivers are the top-down beta positioning as well as bottom-up issuer selection. The fund aims to outperform its index Barclays US Corporate High Yield & Pan European High Yield ex Financials, 2.5% Issuer Cap. The index applies an issuer cap to avoid concentration risk. The investment philosophy is based on managing a solid diversified portfolio with a long term view. Top-down beta positioning is based on the outcome of our credit quarterly outlook meeting, in which the team discusses and defines the fundamental market outlook, valuation of bond markets and market technicals. Bottom-up issuer research is executed by our credit analysts, who execute the fundamental analysis. The portfolio managers are responsible for the portfolio construction. A proprietary developed risk management approach avoids high risk concentration in the portfolio. Holdings in equities can only appear in the portfolio as a result of corporate actions and/or debt restructuring. It is not the intention of the portfolio manager to use options or swaptions. As the investment process is well-structured and proven over time, it contributes to repeatable performance delivery. Duration of the portfolio is managed in line with the index.

Risk management is fully embedded in the investment process to ensure that positions always meet predefined guidelines.