e-fundresearch: Mr Sander Bus, you are the fund manager of the Robeco Global High Yield Bonds fund (ISIN: LU0085136942). Since when are your responsible for the fund management?
Bus: I have been managing Robeco’s global high yield fund since 2001, after being a portfolio manager of our high yield capability since its inception in 1998. In 2001, I became the lead fund manager.
e-fundresearch: Which benchmark do you adhere to?
Bus: We use a composite benchmark, the Barclays Capital US Corporate High Yield + Pan-European High Yield capped at 2.5% ex-financials. Barclays indices are the market standard, as they are transparent and offer us excellent online data availability.
This is a broad benchmark, including smaller issuers. The maximum issuer weight is 2.5%. This ensures a good diversification. This benchmark is much better diversified than large cap indices that are often used by ETFs.
e-fundresearch: Are you also responsible for other funds at the moment?
Bus: I am responsible for our global Robeco High Yield Bonds fund. I work in close cooperation with my colleague Roeland Moraal, who is the fund manager of our Robeco European High Yield Bonds fund.
e-fundresearch: What is the total volume that you manage in all your funds?
Bus: Our high yield funds, the global Robeco High Yield Bonds fund and the Robeco European High Yield Bonds fund together are just over EUR 2.4 billion as per the end of the first quarter of 2012.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2007-2011? Absolutely and relatively to the relevant benchmark?
Bus: In the table, you find the gross performance, both absolute, and relative to the benchmark.
e-fundresearch: How content are you with your own performance in the last years and this year?
Bus: As high yield benchmarks are difficult to replicate due to illiquidity and high turnover in the benchmarks, we think it is also relevant to compare with the peer group. We are happy to see that we are able to consistently outperform most of our peers, including ETFs. Of course performance is a key metric, but it is also to assess how this performance has been realised. We strive to outperform the benchmark and the peer group while simultaneously running a lower risk. We are conservatively positioned.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Bus: Issuer selection is our key performance driver, which we owe to a large part to our seasoned team of 10 career analysts that provide us with the deepest possible fundamental research on issuing companies. Additionally, we benefit from beta allocation as well as from regional allocation. For instance, currently we are overweight Europe versus the US, as valuation is better, while on average the credit quality is higher in Europe.
e-fundresearch: How long have you been a fund manager already?
Bus: In 2001, I became the fund manager of our global high yield fund, so well over a decade by now. I have been with Robeco since 1998 and started as a member of the portfolio management team that started the High Yield capability.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Bus: During the last 10 years we have consistently performed in the top quartile. This has sometimes been awarded with formal awards but the biggest compliment for me is the fact that we have clients that have been with us for many years. This means that they are happy and are confident that we can repeat the performance. That is giving me energy and inspiration to perform. Of course there have been disappointments as well. I was very disappointed by the way European politicians have handled the crisis. It is not unexpected as politicians get elected domestically, so it should not surprise that they all fight for domestic interests. At the same time this attitude could potentially ruin European unity which has brought wealth and peace. Still, it is very disappointing that Europeans have so far not been able to build a political framework that can take decisive action to solve the crisis.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Bus: We are in a sustained period of low economic growth. This is the result of years of growing imbalances in global trade and the global economy. These imbalances have caused unsustainable high debt levels in some pockets of the economy. As this debt bubble has burst, we are now in a period of rebalancing. Debt levels have to come down, trade flows have to reverse. This is causing low economic growth. A period of debt reduction is positive for credit investors. We are investing in companies that can continue to generate free cash flow in a low growth environment. Those cash flows can be used to reduce debt. This approach results in a conservative bias in our portfolios.
e-fundresearch: What are the special challenges in this environment?
Bus: High yield bonds are not traded like stocks on exchanges. The market depends on bank/brokers for the liquidity. As a result of all the restrictions that are put on banks, they are no longer providing as much liquidity to the market as they used to before the crisis. The limited market liquidity results in higher trading costs and more volatility. As a fund manager I have to adjust our strategy to this new reality. We pursue strategies that are long term in order to minimize trading costs. Also, we have to make sure that part of the portfolio is invested in liquid instruments in order to be able to accommodate client flows. The reduced liquidity also creates opportunities for us. We can benefit from mispricing in bonds as this occurs due to limited market liquidity.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Bus: Our objective is always to outperform our peers as well as our benchmark, and provide a decent total return without taking excessive risks. We believe our current set up and team of portfolio managers and analysts will enable us to do so. If our scenario materializes, we think high single digit returns should be achievable.
e-fundresearch: Do you model yourself on someone? Any ideals?
Bus: There are many inspiring people in this world in different areas. I admire people that have the guts to do things differently, people that are able to come up with solutions that are not that obvious at first sight. These are solutions that can bring the world forward. Examples include people that are at the forefront of making our economy more sustainable, such as the promoters of the cradle-to-cradle concept. As a fund manager I believe it is important to acknowledge this trend. Sustainability is an integral element of our investment process. Companies that conduct business in a sustainable way have a better chance of surviving. That is what matters for bond investors.
e-fundresearch: What motivates you in your job?
Bus: Clients trust us in making the right investment decisions. It is a great honour that I can be part of a team that has this role as an intermediary between people and institutions that have money to invest (our clients) and companies that look for money to operate their businesses. Capital markets are important as they are there to make an efficient allocation of money. Financial markets make sure that money flows to the industries that add most value. Our analysts and portfolio managers are a small link in this global financial market. When we do our job well, our clients have a decent return and the economy can prosper. That is what motivates me.
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Bus: I have been involved in High Yield markets since 1998 and I have been enjoying it every day since. There are still many opportunities in this market. In Europe we will see a trend of disintermediation of banks. This means that companies will more often come directly to the capital markets. It is important that capital markets function efficiently. That is in everyone’s interest. As a fund manager, I will contribute my part to make this happen. But the main goal is to continue delivering good investment returns to our clients.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Bus: This is a nice question that makes me smile. A long time ago I had the wish to become a top hockey player. But I had to bury that ambition at a young age as I was not very athletic. I also have always had special interest in politics. I think it is great to have a role to help shape the future of a country. But for now I find more than enough satisfaction in my role as a fund manager. It has elements of both politics as well as sports. It is a continuous challenge to outperform the peers and to be the first to identify new trends. Also it is a profession where we need to have a vision about future developments, economical as well as political.
e-fundresearch: Thank you for the interview!