Robeco Emerging Credits IH USD

The CEMBI Index returned +0.89% (in USD) last month as credit spreads tightened. The 10-year US Treasury yield was unchanged around 2.00%, but fell sharply in the days after month-end. The spread on the Barclays EM USD Corporate Index tightened 11 bps to 3.05%. Markets were again mainly driven by central banks, and not so much by economic data or corporate earnings. European Central Bank President Mario Draghi repeated his message that the ECB is willing to use all tools to reach its inflation target, including the purchase program for corporate bonds. As expected, the Federal Reserve delivered its first rate cut in 11 years, but Chairman Powell indicated it was a “mid-cycle adjustment” rather than a full cutting cycle. Global trade tensions remain a reason to cut rates further, and US President Trump subsequently announced a 10% tariff on an additional USD 300 billion of imports from China. As a result, the US Treasury 10-year bond yield fell significantly, shortly after month end.

All currency risks are hedged.

The fund does not distribute a dividend. The income earned by the fund is reflected in its share price. This means that the fund's total performance is reflected in its share price performance.

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.

The Robeco Emerging Credit Bonds Fund is aimed at investors seeking higher yields than those offered by government bonds, but without the higher risk of a pure high-yield corporate bond fund. The fund invests in the emerging credits markets with predominantly investment grade credit acting as the core of the strategy. It does have the freedom to invest into other asset classes within the fixed income credit universe. The fund is managed by an experienced team with a proven track record capable of generating good performance in both rising and falling bond markets. Robeco uses investment strategies that can provide solid returns in both rising and falling bond markets as proven by its strong track record. The fund benefits from the ample resources at its disposal to cover the credit markets. The investment team is highly experienced and stable with clear split in responsibilities between the portfolio managers and the credit analysts. The investment process is well structured and has a disciplined approach and is based both on a top down macro outlook of the credit markets and an in depth and comprehensive bottom up fundamental credit analysis. The fund applies a total return approach with the flexibility to invest in asset classes such as securitized and high yield. This allocation is based on attaining the best risk reward profile for the fund. As such the portfolio manager will switch out of Investment grade into one of these categories when this corresponds to a more efficient use of the risk budget. The fund also benefits from the Robeco proprietary state of the art risk monitoring system.

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