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Robeco Financial Institutions Bonds M3H USD

ISIN: LU1618352857
  • Diversified exposure to subordinated financial bonds
  • Disciplined and repeatable investment process
  • No active duration, nor FX exposure
Asset class
Current price ()
Performance YTD ()
Currency USD
Total size of fund ()
Dividend payingYes

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).

Price development

No performance data available

Price development

Robeco Financial Institutions Bonds M3H 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 0.83%. The index return for European subordinated financial debt was 0.7% in December. Credit spreads tightened by 11 basis points to 160 basis points, which means that the spread return of subordinated financial debt amounted to 0.8%. Underlying government bond yields were fairly stable during the month. The portfolio return was higher than that of the index. The beta overweight position of approx. 1.15 contributed positively, as spreads tightened. The contribution of issuer selection was positive too. Individual overweight positions that contributed most to the outperformance on a risk-adjusted basis were BNP Paribas, Crédit Agricole and Aegon. Underweight positions in property names such as Unibail-Rodamco and Grand City Properties also contributed to the outperformance. Laggards in the portfolio were Santander UK, LeasePlan and Intesa Sanpaolo.

Statistics

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Dividend paying history

Date Amount
Download dividend history

Market development

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The final month of the year was another month with positive spread performance. Subordinated debt is catching up with the broader credit market and outperformed this broader market in December. After a very volatile year, the average spread for the index is now very close to the level that we saw at the start of the year. As expected, the ECB announced a further expansion of its bond buying program, both in terms of the amount that can be invested and in the duration of the program. The Fed was fairly dovish in its December meeting too, signaling that it will take years before interest rates are raised again. While the picture for monetary support remained rosy, the short-term outlook for economies actually deteriorated, as more and more countries are applying strict lockdowns again. Investors are not too concerned, as vaccination programs have started. The tail risk of a hard Brexit has been removed now that Europe and the UK have finally come to an agreement on trade relations. Most bonds of UK banks did no longer offer that much extra spread as compensation for Brexit risk anyway, as markets had anticipated a last-minute deal already.

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

The fund aims to pay a quarterly 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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Last year was a year of many opportunities. There was a beta opportunity in March, a cyclical recovery opportunity in June and, later in the year, a Covid-19 sector theme opportunity. During this time, we did rigorous research in order to keep the portfolio free from the effects of defaults and accidents. We again succeeded and the fact that we added risk to the portfolio following the sell-off in March led to a nice outperformance for the year. It will be more difficult from here onwards. The possible variation in economic and technical outcomes is large. The year will be either boring or bearish. There is hardly any room for aggressive tightening by central banks. At best, we will see some carry, roll down and certain sectors recovering from Covid-19. We see some potential for further spread compression, for instance in CoCos or in debt issued by Italian and Spanish banks. And there certainly will be relative value opportunities between issuers or segments of the market. But while there is something left on the table, it is not much. So, it will either be a boring year, with a small excess return for the market, or a bearish one, should one of these events occur.

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

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.

Details

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Management company
Fund capital
Size of share class
Outstanding shares
ISINLU1618352857
BloombergRFIM3HU LX
Valoren36852529
WKN
Availability
1st quotation date1495065600000
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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