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).

The funds shown on this website may not be available in your country. Please select your country website (top right corner) to view the products that are available in your country.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.

By clicking Proceed I confirm that I am a professional investor and/or institutional investor and that I have read, understood and accept the terms of use for this website.

Decline
Brexit impact on Robeco Global Total Return Bond Fund

Brexit impact on Robeco Global Total Return Bond Fund

27-06-2016 | Insight

Speed read

  • Risky fixed income assets under pressure, bond yields decline
  • Defensive positioning of the fund turned out positively
  • Further flattening of long-end German yield curve expected

Strong market reactions

Markets reacted strongly following the UK’s surprising vote to leave the EU. Yields of developed market government bonds came down significantly as investors fled into safe asset classes. Risky assets were under pressure. Credit spreads widened and the British pound experienced its biggest drop in 30 years versus the dollar.

Discover the latest insights
Subscribe

Defensive positioning

Robeco Global Total Return Bond Fund is positioned defensively with nearly 75% invested in safe government bonds such as those issued by the US, Germany and Canada. Yields for these bonds came down, and the fund benefited. The total return of the fund on Friday 24 June 2016 turned out positive.

Flattening long end yield curve

Another important position that performed well after the Brexit vote has been the anticipated flattening of the long end of the yield curve. Long-dated government bonds performed better than short-dated ones, which indeed resulted in a flattening of the curve.

Periphery

The uncertainty about the effect that Brexit will have on the political landscape in Europe resulted in a widening of peripheral spreads (the 10-year spread between Italian and German government bonds widened from 130 to 160 basis points). Robeco Global Total Return Bond Fund has no exposure at all to peripheral government bonds which worked out well.

Financials

Robeco Global Total Return Bond Fund’s exposure to subordinated financials and UK banks did suffer from high volatility on Friday. However, after spreads of financials widened significantly in the direct aftermath of the Brexit, they did recovered to some extent in the course of the day.

Emerging markets

The exposure to emerging local debt was holding up well helped by the notion that a Brexit further reduces the likeliness of further rate hikes. This should play out well for emerging markets

Subjects related to this article are: