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Credit investing
Consistently at the forefront of credit management

Credit investing

At Robeco we have a long history in credit, having been investing in corporate bonds since the 1970s. Today, we run an extensive range of fundamentally managed credit portfolios that are all based on in-depth research and a contrarian outlook. We also offer our clients a number of quantitative credit strategies.

  • 30 contrarian investors
    In-depth fundamental research backs up our contrarian style
  • 2 points to remember
    First we determine the beta, then we make sure we avoid the losers
  • 20 years a credit pioneer
    Innovative approach results in a comprehensive range of solutions

Tap into our expertise

Keep up with our knowledge and trends through articles, podcasts and videos:

More insights

Tap into our expertise

Keep up with our knowledge and trends through articles, podcasts and videos:

More insights
It’s time to heed the positive signals
It’s time to heed the positive signals
Robeco’s fixed income teams gradually are shifting towards buying mode.
19-03-2020 | Interview
Market update: what now, what next?
Market update: what now, what next?
While it is never fun to be in the midst of a market meltdown, we have learned that this is a good time to be long-term, active investors.
16-03-2020 | Insight
Market update: Is it time to buy?
Market update: Is it time to buy?
Jamie Stuttard and Fabiana Fedeli discuss the market turbulence caused by the coronavirus outbreak and falling oil prices.
12-03-2020 | Video
Buy-and-maintain credit: sustainability matters
Buy-and-maintain credit: sustainability matters
Sustainable investing is designed to sort the companies positioned to be resistant to future market shocks from those that are not.
12-11-2019 | Insight
Steering change: sustainable automotive credit
Steering change: sustainable automotive credit
The automotive industry still relies heavily on old-school business models and dirty technology.
03-09-2019 | Insight
Our guide to investing in SDG credits
Our guide to investing in SDG credits
The UN’s Sustainable Development Goals (SDGs) have captured the imagination as a great way of impact investing.
27-08-2019 | Insight
Enabling insurers to achieve capital-efficient returns
Enabling insurers to achieve capital-efficient returns
The majority of assets owned by insurers are invested in investment grade fixed income.
19-08-2019 | Insight
Applying factor investing to corporate bonds
Applying factor investing to corporate bonds
Although much factor research focuses on the equity market, the concept and benefits of factor investing apply equally well to the corporate bond market.
04-04-2018 | Insight

30 contrarian investors

Ever since we began running dedicated credit strategies in the 1990s, our portfolios have been grounded in in-depth fundamental research and – most importantly – a contrarian investment style. Basing our decisions on our own research rather than being swayed by public opinion or the market consensus has been instrumental in enabling us to achieve steady outperformance.

One of the main premises of our credit investment philosophy is that corporate bond investors tend to exhibit herd mentality. The result is that they often can crowd into the same positions. We seek to avoid such crowded trades, aiming to reduce the risk of an illiquid position should the market’s preference reverse.

In fact, poor liquidity is one of the main challenges facing credit investors today. Our contrarian investment style can help us to deal with illiquidity while seizing opportunities at the same time. It can enhances our risk-adjusted return potential as we seek to buy after a market sell-off and aim to take risk off the table when a bubble appears to be approaching.

Our contrarian approach has also been instrumental in our credit portfolios’ aim to limit drawdowns over the years. For example, our high yield strategy did relatively well in the crises of 2001, 2008 and 2015, outperforming our benchmark. The focus on the long term, avoidance of downside risk, and contrarian investment stance were instrumental in these year.

Read the latest research on credits
Credits research library

We believe that a successful contrarian investment style is only possible with in-depth research capabilities necessary to back up our in-house investment theses. Our Credit team consists of 30 investment professionals with hands-on credit experience across full market cycles. What’s more, we have adopted a career analyst model, providing our analysts with the opportunities and resources to fully develop the research skills, global sector expertise and knowledge of issuers that are vital if they are to pinpoint investment opportunities.

2 points to remember

There are lots of opportunities to outperform in the corporate bond markets, but to manage a corporate bond portfolio successfully there are two main points to remember. First, it’s important to be able to take on the right level of risk at the right time. And second, good credit management isn’t about selecting a few of the best-performing bonds – it’s much more important to build a well-diversified portfolio that avoids the losers.

The Market Cycle
Credits Quarterly Outlook

The first stage of our process is to determine the right amount of exposure to the credit markets based on our view of the market cycle. Understanding the global macroeconomic backdrop is essential in defining our expectations for the various classes of corporate bond. Therefore, the thorough top-down assessment of the credit markets we perform is essential, when aiming to maximize the returns for our clients.

A top-down view may be important, but we believe that bottom-up issuer selection is the most significant driver of our credit portfolios’ returns. Credit selection starts off with our analysts taking into account five different variables at each company they analyze. They look at its:

  • business position
  • corporate strategy
  • financial profile
  • corporate structure
  • ESG profile

From there, our portfolio managers go on to select the most attractive bonds for inclusion in our portfolios.

A credit pioneer for nearly 20 years

Robeco has developed proprietary strategies and investment techniques. As well as our pioneering DTS (duration times spread) risk management technique, our approach to credit has seen us launch the first high yield fund in Europe, incorporate ESG as an integral part of our credit investment processes, and develop a range of factor-based quantitative credit strategies.

We were early to spot the potential of high-yield credit. Back in 1998, Robeco became the first asset manager to launch a high yield bond fund in continental Europe. The fund’s current manager, Sander Bus, has been involved in running it ever since. It wasn’t until the mid-2000s that high yield really gained traction among European investors, but since then this global fund’s assets under management have grown strongly and we have gone on to launch a similar fund focusing on European high-yield credit.

ESG
ESG
Environmental, social and corporate governance
Sustainable investing

We incorporate ESG analysis in our credit investment processes. In fact, ESG is a vital part of our approach because we believe that credit investing is all about avoiding the losers – companies that can’t meet their obligations. By considering ESG factors, such as corporate governance, we aim to spot early warning signs that traditional financial analysis might miss. As early as 2010, we launched a sustainable credit fund that aims to minimize its environmental footprint as well as maximizing returns.
Also read: Six ways to improve the sustainability of credit portfolios

We need to be able to measure the true risk of our portfolios – historically, one of the biggest challenges facing credit investors. Back in 2004 we developed a method on the observation that the product of a bond’s credit spread and its duration – its DTS – can predics its future volatility. Now widely used throughout the industry, our DTS technique has found its way into all aspects of how we manage our credit portfolios at Robeco.

Bonds with a long duration are more volatile than those with a short duration. Also, bonds with a high spread are more volatile than those with a low spread. To make an assessment of the real risk of a bond we need to consider both aspects. This concept is the foundation of our credit risk model.

We run quant credit as well. In addition to our fundamental credit range we provide our clients with access to two quantitative, factor-based strategies: one that invests in low-risk corporate bonds, and a multi-factor credit strategy that exploits four proven factors. The potential benefits of factor investing are well known among equity investors, but far fewer people are aware of its potential in the corporate bond markets. We’ve published studies that shows that factor investing can work well for credit.

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Disclaimer

This page is intended for US prospects, clients and investors only and includes information about the capabilities, staffing and history of RIAM US and its participating affiliates, which may include information on strategies not yet available in the US. SEC regulations are applicable only to clients, prospects and investors of RIAM US. Robeco BV, Robeco HK and Robeco SH are considered a “participating affiliate” of RIAM US and some of their employees are “associated persons” of RIAM US as per relevant SEC no-action guidance. Employees identified as associated persons of RIAM US perform activities directly or indirectly related to the investment advisory services provided by RIAM US. In those situations, these individuals are deemed to be acting on behalf of IUAM, a US SEC registered investment adviser.

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