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Robeco European High Yield Bonds DH USD

Index: Bloomberg Pan-European HY Corporate ex Financials 2.5% Issuer Constraint index
ISIN: LU1408526512
  • Managed with a conservative approach
  • Disciplined and repeatable investment process
  • Experienced team management
Asset class
Current price ()
Performance YTD ()
Currency USD
Total size of fund ()
Dividend payingNo

About this fund

Robeco European High Yield Bonds is an actively managed fund that invests in bonds with a sub-investment grade rating, issued primarily by European and US issuers. The selection of these bonds is based on fundamental analysis. The fund's objective is to provide long-term capital growth. The portfolio is broadly diversified, with a structural bias towards the higher rated part in high yield (BB/B). Performance drivers are the top-down beta positioning as well as bottom-up issuer selection.

Price development

No performance data available

Price development

Robeco European High Yield Bonds DH USD

Performance

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The value of the investments may fluctuate. Past performance is no guarantee of future results.
Annualized (for periods longer than one year).
Cumulized (total amount of return).
Performances are gross of fees and based on closing values. In reality, costs (such as management fees and other costs) are charged. These have a negative effect on the returns shown.

Performances are net of fees and based on transaction prices.
Fund Reference index
The value of the investments may fluctuate. Past performance is no guarantee of future results.
Annualized (for periods longer than one year).
Cumulized (total amount of return).
Performances are gross of fees and based on closing values. In reality, costs (such as management fees and other costs) are charged. These have a negative effect on the returns shown.

Performances are net of fees and based on transaction prices.

Performance explanation

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Based on transaction prices, the fund's return was 3.73%. The European high yield bond index had a total return in October of 2.48%. Both tighter spreads and underlying rates contributed to the positive total return. The fund outperformed its benchmark with almost 100 bps this month (depending on the share class). For the year, total returns of the market are still very negative. The relative performance of the fund moved to positive territory year-to-date. Top-performing sectors: autos (+4.6%), energy (+4.3%) and paper (+3.8%). Bottom-performing sectors: other financial (-5.2%), metals & mining (-3.0%) and consumer products (-1.2%). The outperformance for the month was mainly due to issuer selection (80 bps), while beta policy also added 13 bps. Our quality bias contributed to performance, as we started to see the first signs of dispersion; BBs are outperforming single Bs and CCCs, whereby we see more idiosyncratic blow ups in the latter rating category. On an issuer level, the largest detractor was our overweight in Sigma (-5 bps), as bonds moved slowly wider in a strong market. We benefited from our overweight in automotive via Faurecia (+9 bps) and Renault (+5 bps), but also from our large underweight in Telecom Italia (+8 bps).

Statistics

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Market development

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After a horrendous third quarter, the global high yield market recovered a bit in October, which proved to be a strong month for financial assets. Spreads and yields tightened 43 and 41 bps respectively. The key driver behind this was again the speculation of the Fed pivoting away from its current aggressive rate hike path. This narrative got further support as other central banks like Australia and Canada unexpectedly reduced their pace with 25 bps compared to expectations. But underlying data coming in for the US regarding CPI's again looked stronger than expected and Fed speakers swiftly pushed back on any possible pivot. The ECB had dovish elements in its own press conference, resurrecting pivoting sentiment, but in the end that also faded away as flash CPI in the Eurozone came in at 10.7%, with core CPI also hitting a record high 5.0%. Strong inflation readings will limit the ability of central banks to move away from a hawkish direction. On a positive note, we saw European natural gas prices decline on the back of the unusually warm weather in October. October saw EUR 3.0 bln of issuance in European currencies.

Fund allocation

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Name Sector Weight
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Currency policy

All currency risks are hedged.

Derivative policy

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

Dividend policy

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.

ESG Integration policy

The fund incorporates sustainability in the investment process via exclusions, ESG integration, a minimum allocation to ESG-labeled bonds, and engagement. 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. Furthermore, the fund invests at least 2% in green, social, sustainable, and/or sustainability-linked bonds. Lastly, where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.

Investment policy

Robeco European High Yield Bonds is an actively managed fund that invests in bonds with a sub-investment grade rating, issued primarily by European and US issuers. The selection of these bonds is based on fundamental analysis. The fund's objective is to provide long-term capital growth. The fund promotes E&S (i.e. Environmental and Social) characteristics within the meaning of Article 8 of the European Sustainable Finance Disclosure Regulation, integrates sustainability risks in the investment process and applies Robeco’s Good Governance policy. The fund applies sustainability indicators, including but not limited to, normative, activity-based and region-based exclusions, and engagement. The portfolio is broadly diversified, with a structural bias towards 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 majority of bonds selected will be components of the benchmark, but bonds outside the benchmark may be selected too. The fund can deviate substantially from the weightings of the benchmark. The fund aims to outperform the benchmark over the long run, while still controlling relative risk through the application of limits (on currencies and issuers) to the extent of the deviation from the benchmark. This will consequently limit the deviation of the performance relative to the benchmark. The Benchmark is a broad market-weighted index that is not consistent with the ESG characteristics promoted by the fund.

Risk policy

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

Sustainability profile

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Exclusions

ESG Integration

Engagement

Sustainability

{{'fund.detail.general.perDate' | labelize:[ fundDate(fund.fundFacts.date,'llll') ]}}

The fund incorporates sustainability in the investment process via exclusions, ESG integration, a minimum allocation to ESG-labeled bonds, and engagement. 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. Furthermore, the fund invests at least 2% in green, social, sustainable, and/or sustainability-linked bonds. Lastly, where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.

Expectation of fund manager

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We are entering a phase of re-globalization. Secular trends overlay cyclical trends in which central banks continue their own war on inflation. Central banks believe they have to inflict pain on the economy, on the demand side, to bring down inflation expectations. The Fed will only stop hiking when one of three conditions is satisfied: inflation comes down, the economy slows or financial conditions need to tighten more. The credit cycle has to unwind a little further and there is a risk that central banks will overreact. We do acknowledge that the corporate sector is healthier at the start of this recession compared to previous cycles. But we need more proof that a full-blown recession is priced in, we are not there yet. Technically, central banks will hike more and in many cases QT still has to start. We are aware of wider spreads and in some pockets of the market we do see valuations becoming attractive. But a bit more patience is prudent before making a long beta call. We focus on quality and still favor more stable non-cyclical companies. Beta has been increased a bit and we are watching derivatives for the next big step.

Roeland Moraal, Sander Bus
Roeland Moraal, Sander Bus

Roeland Moraal, Sander Bus

Roeland Moraal is Lead Portfolio Manager European High Yield in the Credit team. Before assuming this role, he was Portfolio Manager in the Robeco Duration team and worked as an Analyst with the Institute for Research and Investment Services. Roeland started his career in the industry in 1997. He holds a Master's in Applied Mathematics from the University of Twente and a Master’s in Law from Erasmus University Rotterdam. Sander Bus is Co-Head of the Credit team and Lead Portfolio Manager Global High Yield Bonds. He has been dedicated to High Yield at Robeco since 1998. Previously, Sander worked for two years as a Fixed Income Analyst at Rabobank where he started his career in the industry in 1996. He holds a Master's in Financial Economics from Erasmus University Rotterdam and he is a CFA® charterholder.

Team

The Robeco European High Yield fund is managed within Robeco’s credit team, which consists of nine portfolio managers and twenty-three credit analysts. The portfolio managers are responsible for the construction and management of the credit portfolios, whereas the analysts cover the team’s fundamental research. Our analysts have long term experience in their respective sectors which they cover globally. Each analyst covers both investment grade and high yield, providing them an information advantage and benefiting from inefficiencies that traditionally exist between the two segmented markets. Furthermore, the credit team is supported by three dedicated quantitative researchers and four fixed income traders. On average, the members of the credit team have an experience in the asset management industry of seventeen years, of which eight years with Robeco.

Details

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Management company
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ISINLU1408526512
BloombergREHYDHU LX
Valoren32674532
WKN
Availability
1st quotation date1463616000000
Close financial year31-12
Legal status
Tracking error limit (%)
Reference index

Cost of this fund

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This fund deducts ongoing charges of
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Fiscal product treatment

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 0.05% 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.

Fiscal treatment of investor

The fiscal consequences of investing in this fund depend on the investor's personal situation. For private investors in the Netherlands real interest and dividend income or capital gains received on their investments are not relevant for tax purposes. Each year investors pay income tax on the value of their net assets as at 1 January if and inasmuch as such net assets exceed the investor’s tax-free allowance. Any amount invested in the fund forms part of the investor's net assets. Private investors who are resident outside the Netherlands will not be taxed in the Netherlands on their investments in the fund. However, such investors may be taxed in their country of residence on any income from an investment in this fund based on the applicable national fiscal laws. Other fiscal rules apply to legal entities or professional investors. We advise 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.

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