Robeco High Yield Bonds FH EUR

Sander Bus is CIO and Portfolio Manager High Yield Bonds in the Credit team. He has been dedicated to High Yield at Robeco since 1998. Previously, Sander worked for two years as a Fixed Income Analyst at Rabobank where he started his career in the industry in 1996. He holds a Master's in Financial Economics from Erasmus University Rotterdam and he is a CFA® charterholder. Roeland Moraal is Portfolio Manager High Yield in the Credit team. Before assuming this role, he was Portfolio Manager in the Robeco Duration team and worked as an Analyst with the Institute for Research and Investment Services. Roeland started his career in the industry in 1997. He holds a Master's in Applied Mathematics from the University of Twente and a Master’s in Law from Erasmus University Rotterdam. Christiaan Lever is Portfolio Manager High Yield and Emerging Credits in the Credit team. Before assuming this role in 2016, he was Financial Risk Manager at Robeco, focusing on market risk, counterparty risk and liquidity risk within fixed Income markets. Christiaan has been active in the industry since 2010. He holds a Master's in Quantitative Finance and in Econometrics from Erasmus University Rotterdam. Daniel de Koning is Portfolio Manager High Yield in the Credit team. Prior to joining Robeco in 2020, he was Portfolio Manager High Yield at NN Investment Partners. Daniel started his career in 2011 at APG Asset Management, where he held roles of Credit Analyst and Portfolio Manager High Yield. He holds a Master’s in Business Economics from the University of Amsterdam and he is a CFA® and CAIA® charterholder. The Robeco High Yield fund is managed within Robeco’s credit team, which consists of nine portfolio managers and twenty-three credit 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 three dedicated quantitative researchers and four 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.

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.

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.

The fund incorporates sustainability in the investment process via exclusions, ESG integration, a minimum allocation to ESG-labeled bonds, and engagement. The fund does not invest in credit issuers that are in breach of international norms or where activities have been deemed detrimental to society following Robeco's exclusion policy. Financially material ESG factors are integrated in the bottom-up security analysis to assess the impact on the issuer's fundamental credit quality. In the credit selection the fund limits exposure to issuers with an elevated sustainability risk profile. Furthermore, the fund invests at least 2% in green, social, sustainable, and/or sustainability-linked bonds. Lastly, where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.The following sections display the ESG-metrics for this fund along with short descriptions. For more information please visit the sustainability-related disclosures.The index used for all sustainability visuals is based on Bloomberg US Corporate High Yield + Pan Euro HY ex Financials 2.5% Issuer Cap.

During November, US high yield market spreads tightened by 6 bps and yields contracted by 13 basis points, ending the period at 287 bps and 6.89%, respectively. November began with strong markets following Trump's election victory. The risk-on frenzy spanned most asset classes, as the market-friendly and pro-business policies announced by the incoming US President were quickly priced in. Although Trump's victory also resulted in increasing inflation expectations for the coming year, the Fed did lower interest rates by 25 bps to 4.5%. In Europe, inflation was on the rise in the latest data, whereas the UK opted to cut rates by 25 bps to 4.75% as prices are still normalizing. The difficult budget negotiations in France led to underperformance of the country's assets, as investors started to anticipate a collapse of Barnier's administration. New issuance in US high yield bonds was at a low in November, with USD 10.4 bln printed, whereas the default rate remains muted, currently at a 29-month low.

Based on transaction prices, the fund's return was 0.38%. In November, the high yield bond index posted a total return of 0.9%. Partly driven by positive excess credit returns (~50 bps), the performance was aided by treasury yields dropping to 4.19%. The portfolio underperformed versus the benchmark by 38 bps over the month. The outcome was driven partly by negative beta contribution (-6 bps) but mostly by issuer selection (-32 bps). On a risk-adjusted basis, EUR-denominated bonds underperformed versus USD, thus our higher exposure to euro names suffered. Higher quality bonds outperformed, benefiting our up-in-quality bias. Underweight risk in the energy sector proved beneficial (+2 bps), whereas selection in the capital goods sector was the main detractor (-19 bps). Underweight in Altice France added 3 bps, as the levered Telco released disappointing earnings. On the other hand, worsening numbers for Selecta detracted 16 bps, as the company is nearing maturities and struggling to find refinancing options.

The Fed cut interest rates by 50 basis points, declaring victory over inflation. This preemptive move aims to prevent economic damage from tight policy. Predicting financial markets is not about forecasting recessions; it's about predicting the direction of change in the consensus. The prevailing market consensus is that the Fed will succeed in achieving a soft landing, balancing the labor market without triggering a sharp rise in unemployment. While we agree, we advise caution in increasing portfolio risk, as the market can pivot quickly, as we have seen in August. The situation in the rest of the world is not comparable to that of the US. China remains deeply entrenched in economic troubles. There is significant overcapacity in the manufacturing sector, which triggered a deflationary spiral that is proving difficult to reverse. This is the environment in which it is important to firmly hold on to our quality tilt and accept a beta below one.