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Robeco Financial Institutions Bonds FH USD

Index: Bloomberg Barclays Euro-Aggregate: Corp.Fin.Subordinated 2% Issuer Cap(hedged into USD)
ISIN: LU1048590209
  • Diversified exposure to subordinated financial bonds
  • Disciplined and repeatable investment process
  • No active duration, nor FX exposure
Assets class
Current price ()
Performance YTD ()
Currency USD
Total size of fund ()
Dividend payingNo

About this fund

Robeco Financial Institutions Bonds is an actively managed fund that mainly invests in subordinated euro-denominated bonds issued by financial institutions. The selection of these bonds is based on fundamental analysis. The fund offers a diversified exposure to banks and insurance companies. Focus of the fund is in general towards higher rated issuers (investment grade). This share class hedges the duration (interest-rate sensitivity) of the portfolio to nearly zero.

Price development

No performance data available

Price development

Robeco Financial Institutions Bonds FH 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 0.82%. The portfolio posted a positive return in January, which was better than the return of the index. The average credit spread of the index closed the month at a level of 158 basis points, which is 9 basis points higher than at the end of December. This means that subordinated financial bonds performed 0.25% worse than underlying government bonds. Yields of underlying government bonds declined during the month, contributing positively to the portfolio's return. The beta of the portfolio was above one during the month, which contributed negatively to the performance of the fund. The contribution of issuer selection was positive in January. Bank CoCos posted a better return than the benchmark, which contributed to the outperformance of the fund. The best-performing positions on a risk-adjusted basis were CaixaBank, LeasePlan and Bankia. Insurance debt underperformed the benchmark, likely driven by the decline in government bond yields. This contributed negatively to performance, as we hold an overweight position. The worst-performing positions were AXA, Allianz and Swiss Life.

Statistics

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Above mentioned ratios are based on gross of fees returns
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Market development

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Market sentiment was positive, when looking at the performance of equity markets. Bond investors seemed to be more risk-averse, as was evidenced by a strong decline in government bond yields. Worries about the coronavirus and the subsequent decline in oil prices are explanatory factors for lower bond yields. However, the impact on credit markets was limited. Non-financial spreads only widened a few basis points, while financial spreads widened a little bit more. Higher risk bond categories and names that underperformed last year did very well in January. Examples are bank CoCos and names such as Deutsche Bank and Monte dei Paschi. The fund has no exposure to these individual names. Insurance bonds underperformed, especially bonds with a perpetual non-call 10 structure. The fund is overweight in this category. The market was open for new issues again, we participated in new bond deals such as Santander CoCos and Jyske Bank Tier 2s. Santander announced the redemption of the CoCo that it had left outstanding in March 2019.

Fund allocation

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Name Sector Weight
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Fund Classification

YesNoN/A 
Voting
Engagement
ESG integration
Exclusion
YesNoN/A 
Screening
Integration
Sustainability Themed Fund

Currency policy

All currency risks are hedged.

Derivative policy

Robeco Financial Institutions Bonds fund make use of derivatives for hedging purposes as well as for investment purposes. These derivatives are very liquid.

Dividend policy

This share class of the fund does not distribute dividend.

ESG Integration policy

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.

Investment policy

Robeco Financial Institutions Bonds mainly invests in subordinated euro-denominated bonds issued by financial institutions. The fund offers a diversified exposure across 50-60 issuers, including the new style hybrid bonds that are being issued on the back of Basel III regulation. Focus of the fund are higher rated bonds (investment grade) with a tilt to Tier 2 bonds. The fund aims to outperform its index Barclays Euro-Aggregate: Corporates Financials Subordinated 2% 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 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. 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 and currency exposure is hedged.

Risk policy

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

Expectation of fund manager

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Spreads have tightened massively from the peak at the end of 2018 and are now approaching the levels of January 2018. However, after the ECB meeting in September, it has become clear that monetary policy will remain very accommodative for the next years. This means that interest rates will remain low and that investors are almost forced to hunt for yield.We do not think that searching for yield in the area of subordinated financial debt is too risky. It is clear that the quality of balance sheets has improved significantly over the past decade, especially for the banking sector. This is acknowledged by supervisors and the first relaxation of capital rules for European banks has been announced. In the near future, banks will be allowed to replace a small part of their common equity buffer by Tier 1 and Tier 2 debt. We do not see that as a turnaround in the restoration of capital buffers, but more as a confirmation that banks have reached buffer levels that are sufficiently high.In our portfolio construction we maintain our traditional conservative stance, while we still see interesting opportunities for instance in Spanish banks and in the relatively new category of insurance CoCos.

Jan Willem de Moor
Jan Willem de Moor

Jan Willem de Moor

Mr. de Moor is a Senior Portfolio Manager and a member of the Credit team. Prior to joining Robeco in 2005, Mr. de Moor was employed by SBA Artsenpensioenfondsen as Senior Portfolio Manager Equities for six years. Before that, he worked at SNS Asset Management holding positions of Portfolio Manager Equities (three years) and Research Analyst (two years). Jan Willem de Moor started his career in the Investment Industry in 1994. He holds a Master's degree in Economics from Tilburg University.

Team

<HTML><P>The Robeco Financial Institutions Bonds fund is managed within Robeco’s credit team, which consists of nine portfolio managers and twenty-three credit analysts (of which four financials 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 dedicated quantitative researchers and 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.</P></HTML>

Details

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Management company
Fund capital
Size of share class
Outstanding shares
ISINLU1048590209
BloombergRFIBFUS LX
Valoren24024679
WKNA2DHXJ
Availability
1st quotation date1395878400000
Close financial year31-12
Legal status
Tracking error limit (%)
Reference index

Cost of this fund

Ongoing charges

This fund deducts ongoing charges of
These charges comprise
Management fee
Service fee

Transaction costs

The expected transaction costs are

Performance fee

This fund may also deduct a performance fee of

Extra fees

max entry fee
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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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Disclaimer

The information contained in the website is solely intended for professional investors. Some funds shown on this website fall outside the scope of the Dutch Act on the Financial Supervision (Wet op het financieel toezicht) and therefore do not (need to) have a license from the Authority for the Financial Markets (AFM).

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