Robeco Corporate Hybrid bonds IH USD

The Global Corporate Hybrids Index delivered a total return of +0.61% last month. The average credit spread on the global index widened 15 bps to 198 bps at the end of the month. As a result, the global corporate hybrid market underperformed treasuries with an excess return of -0.33%.Global equity markets continued to rally into the new year. Performance in credit markets was more muted, although sectors such as bank CoCos and corporate hybrids performed well in the first half of the month. The outbreak of the coronavirus in China caused real uncertainty in global markets. Yields on US and German treasury bonds dropped significantly. While it is too early to gauge its overall impact, it is already clear that the coronavirus will have an impact on the global economy. China plays a much larger role in the global economy today, compared to 2003 when we had the SARS virus. The European credit market clearly outperformed the US market last month. The European Central Bank added EUR 4.6 billion to its corporate bond holdings. The size of its corporate sector portfolio was EUR 189 billion at the end of the month.

All currency risks are hedged.

Robeco Corporate Hybrid bonds make use of derivatives for hedging purposes as well as for investment purposes. These derivatives are very liquid.

This share class of the fund will not distribute a dividend.

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 Corporate Hybrid Bonds invests in corporate hybrid bonds issued by non-financials. Corporate hybrids are subordinated bonds, which rank between debt and equity in a company’s capital structure. The fund selects the best in class hybrids bonds, with the best risk-return characteristics. Corporate hybrids are mainly issued by investment grade issuers. The aim of the fund is to provide long term capital growth by investments in corporate hybrids bonds. The fund aims to outperform its benchmark: Bloomberg Barclays Global Corporate Hybrids 3% Issuer Cap. The investment philosophy is based on managing a solid 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 is discussing 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. Duration of the portfolio is managed in line with the index and currency exposure is hedged.

Risk management is fully embedded in the investment process so as to ensure that the fund's positions remain within set limits at all times.