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Robeco Financial Institutions Bonds 0FH EUR

Index: Bloomberg Barclays Euro-Aggregate: Corp. Fin. Subordinated 2% Issuer Cap (EUR)
ISIN: LU1246241423
  • Diversified exposure to subordinated financial bonds
  • Disciplined and repeatable investment process
  • No active duration, nor FX exposure
Assets class
Current price ()
Performance YTD ()
Currency EUR
Total size of fund ()
Dividend payingNo

About this fund

Robeco Financial Institutions Bonds 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 0FH EUR

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 0.10%. The portfolio posted a negative return in September, but a bit better than the return of the index. The average credit spread of the index widened from 184 basis points to 186 basis points during the month. This means that the excess return of subordinated financial bonds over government debt amounted to only 0.15% in September. Underlying government bond yields rose during the month, contributing negatively to the portfolio’s return. The beta of the portfolio was above one during the month, which led to a small positive contribution to the performance. The contribution of issuer selection was positive too in September. Positions in USD and GBP bonds outperformed and the overweight in UK banks contributed positively as well. Bank CoCos outperformed on a risk-adjusted basis, while insurance perpetuals underperformed. Largest individual contributors to the relative performance were the overweight positions in Banco Sabadell, CaixaBank, Raiffeisen Bank and Bankia. Laggards were insurance perpetuals of BNP Cardiff and Helvetia.

Statistics

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Market development

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The most important news during the month came from the central banks. As expected, the ECB announced a new round of Quantitative Easing, in combination with a rate cut of 10 basis points. The biggest surprise in the announcement was the fact that bond buying will start without an end date. This means that it may take years before the ECB will stop buying and that it may take years before we will see positive short-term rates in Europe again. Banks will be supported by deposit-tiering, which means that the new -0.50% deposit rate will only apply to part of their deposits at the central bank. Also the terms of the new long-term financing facility for the banks (LTRO) will be more attractive than before. In the US, the Federal Reserve cut interest rates by 0.25%, with the Fed reluctant to cut further. It seems that the Fed will only become more aggressive in cutting interest rates if the labor markets show a more significant deterioration. Weaker economic data did not have much impact on investor appetite for new bond issues. We bought new AT1 CoCos like those of Nationwide and Barclays, but also green Tier 2 bonds issued by Generali.

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 into the euro. Derivatives are used to lower interest rate sensitivity and can also be used for various other reasons, for instance for hedging single positions, for arbitrage, and for leverage to gain extra exposure to the credit market.

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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We maintained our positive view on the fundamental credit quality of the financial sector. The low yield environment is in itself not helpful for financials and this is for instance reflected in the share price performance of the banking sector. But banks and insurance companies have been dealing with the low interest rate environment for a number of years already. We think that pressure on net interest margins is more of a concern to shareholders than to bondholders. After the ECB meeting in September, it has become clear that monetary policy will remain very accommodative for the next years. Interest rates will remain low and the ECB will start buying corporate bonds again. We are already experiencing a search for yield, where higher yielding bonds like subordinated financials are outperforming the bonds that will be bought by the ECB. We expect this trend to continue and hold on to our overweight beta positioning.

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
ISINLU1246241423
BloombergRFIBOFH LX
Valoren28513456
WKN
Availability
1st quotation date1435190400000
Close financial year31-12
Legal status
Tracking error limit (%)
Morningstar
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
Max exit fee
Max sub fee
Max switch fee

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.

Disclaimer

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.

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