Global bond markets offer attractive income – but quality and selectivity are crucial

HAVING a regular source of income remains a central consideration for many Singapore investors, particularly amid market uncertainty and shifting interest‑rate expectations.

With yields on cash declining, investors are increasingly seeking more rewarding and resilient sources of income. The question, however, is where attractive yield can be accessed while managing uncertainty and downside risk.

It is against this backdrop that asset manager Robeco extends its global flexible credit income strategy – once available only to institutional investors and private banks – to retail investors in Singapore through fund distributors, marking its next strategic move following its tenth anniversary in the city-state.

Founded in Rotterdam in 1929, Robeco refers to itself as an “investment engineer”, reflecting a preference for structure over speculation and process over prediction.

In fixed income, this mindset translates into an emphasis on diversification, quality, disciplined risk control and a deliberately contrarian perspective. Rather than chasing yield at all costs, Robeco applies a quality‑led and sustainable approach to credit investing.

Active credit management designed for changing markets

Active management lies at the heart of Robeco’s global credit income capability. Rather than relying on static allocations or benchmark‑driven positioning, portfolios are managed dynamically with top-down credit segment allocation and duration management, and bottom-up issuer selection.

Robeco believes that having a top-down view on credit markets is crucial in creating outperformance for credit portfolios.

This top‑down view guides how investments are allocated across credit segments as conditions change, and how much duration risk to take. It is complemented by bottom‑up issuer selection grounded in fundamental credit research. Robeco’s fundamental credit analysis centres on an issuer’s cash‑generating capacity, the quality and sustainability of its cash flows, and its ability to service and repay debt across different scenarios.

This ensures a strong focus on balance‑sheet strength, business resilience and downside risk, so that income generation is underpinned by credit quality rather than fragility. Sustainability analysis also adds an extra angle to assess the future readiness of a company.

Different stages of the credit cycle call for different investment approaches

As geopolitical and economic uncertainties persist, high‑quality credit and global diversification have become increasingly important. The Robeco global credit team looks far and wide to uncover overlooked opportunities across global credit markets – not just in North America, but also in Europe (including the UK), other developed and emerging markets and across both investment‑grade and quality high‑yield bonds.

Seeking quality even in high-yield bonds

In credit investing, avoiding losses is often more important than pursuing higher yields, as elevated yield levels do not necessarily translate into superior long‑term returns. Robeco therefore adopts a contrarian, value‑focused approach, targeting assets that are undervalued or out of favour while maintaining a strong emphasis on credit quality.

This philosophy underpins a disciplined investment process designed to identify bonds with attractive risk‑return characteristics across market cycles. By prioritising downside management and valuation discipline, Robeco seeks to navigate volatility, exploit market inefficiencies and deliver strong risk-adjusted returns.

A pioneer to credit risk management

Central to Robeco’s credit process is a long‑standing focus on measuring risk accurately – historically one of the greatest challenges for credit investors. In 2003, Robeco co-developed an innovative framework based on the insight that the product of a bond’s credit spread and duration – known as Duration Times Spread (DTS) – is a strong predictor of its future volatility.

DTS has since become embedded across Robeco’s credit investment process and is now widely recognised as an industry standard for measuring the credit risk of corporate bonds.

Robeco established its presence in Singapore in 2016 as an Asian hub for fixed income and sustainability expertise. What began as a small team has grown into a broader platform encompassing fixed income investment capabilities, sustainability research, and sales and marketing functions.

As Asia’s capital markets continue to deepen, the Singapore‑based team contributes regional insights to Robeco’s global investment platform, helping bridge local market understanding with global credit strategies.

A decade after establishing its presence in Singapore, Robeco’s progress reflects a philosophy of steady and deliberate growth. It is a story shaped by consistency – applying active management thoughtfully, maintaining discipline through market cycles, and extending a research‑driven investment culture to a broader investor base.

Markets will continue to evolve, and income challenges will shift as conditions change. Yet Robeco’s conviction remains unchanged: Quality, discipline and active management are enduring advantages.

As the firm enters its second decade in Singapore, it is guided by the same principles rooted in its Dutch heritage nearly a century ago – prioritising structure, selectivity and research-driven.

Learn more about Robeco’s approach to credit investing.

Disclaimer:​​

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