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Our latest Advance magazine leads on our successful engagement in the troubled soy food chain, plus all the latest developments in sustainability investing. Read more ...
It was up close and personal for Engagement Specialist Michiel van Esch when he learnt the do’s and don’ts of engaging companies in Asia during a three-month spell in Robeco’s Hong Kong office. It requires a different approach to what is common practice elsewhere in the world.
Managing transaction costs is one of the major considerations in Robeco’s Quantitative Equity strategies, and over the years we have put considerable effort into finding ways to keep them as low as possible. In this article, Weili Zhou, a senior researcher in our Quantitative Equities team, describes the approaches we adopt to achieve this aim.
Macquarie applies Benford’s law to identify firms which may be manipulating their accounting data, or perhaps even engaging in outright fraud. According to this law, there is a natural frequency of 1 to 9 occurring as the first digit in a number, with the chance of 1 for instance being around 30%, and the chance of 9 less than 5%.
The world economy is marked by sluggish growth and absent price pressure. Despite unprecedented monetary easing, inflation expectations have declined further. Bond yields have set new historical lows and can continue to do so. Central bank buying programs add to the picture as bond scarcity in core government markets increases downward pressure on interest rates.
“Putting your research to the test is always exciting, and if it then works out well, then that’s very satisfying.” That’s how Patrick Houweling describes celebrating the first anniversary of the Global Multi-Factor Credits fund, with an outperformance chart to go with the birthday cake.
Robeco has added Quality to the key list of factors that it follows when constructing factor investing portfolios in equities. But how to define it? There is a disconnect between definitions of the factor ‘quality’ by academics and how it is defined by many in the asset management industry.
A list of UK asset managers have frozen withdrawals from real estate funds following massive redemptions by investors worrying over Brexit. We expect the impact on indirect listed real estate to be limited, although institutional selling pressure may affect the sector. In this climate, our focus on long-term winners capitalizing on long-term industry trends pays off.
Smart beta indices are a popular way of implementing a factor investing strategy. However, research suggests that this may not the best way, as the factor exposure provided by popular smart beta strategies varies greatly and they do not unlock the full potential of factor premiums.
Factor investing – the investment strategy that aims to capture ‘hidden’ returns in financial markets – is rapidly gaining in popularity. However, it is important to follow the right factors, and to be wary of one factor counteracting another, to get the best results. Otherwise, investors might follow generic factor strategies that expose them to risks that are not properly rewarded, resulting in inferior performance.
The rise of ETFs as the cheaper alternative to actively managed investment funds may rightly be called a success, with some USD 3 trillion under management. The index trackers are ‘cheap, safe and transparent’. But not everyone is quite so enthusiastic.
American companies are levering up and central banks are providing ever cheaper money. With increasing debt, markets are becoming more vulnerable to volatility. We pursue a guerrilla strategy, adopting a neutral starting point and taking tactical positions where value pops up due to excessive fear. We start with a higher beta driven by the Brexit spread premium.
Helen Mountford is the Director of Economics at the World Resources Institute and the Program Director for its New Climate Economy initiative, which provides independent evidence on the relationship between actions which can strengthen economic performance and reduce the risk of dangerous climate change. In this interview she outlines how she believes sustainable investment works best in combination with government policies.
Robeco Global Total Return Bond Fund, Robeco Euro Government Bonds and Robeco All Strategy Euro Bonds are positioned for a flattening of the long end of the German curve. The rules of its own Quantitative Easing program are forcing the ECB to buy long-end government bonds only, which will cause the yield curve to flatten.
Many asset managers claim to do ESG integration. But do they really? It can be a tough call, as the marketing is often stronger than the execution; scores and ratings tell only part of the story; and the confusion over concepts makes it even harder. Here are four questions that can help you get behind the façade.
Simon Property Group (‘Simon’) is a US real estate company that develops and operates shopping centers. The company has remarkably improved its sustainability performance since we started to engage with them in 2013.
Don't expect the standard list of banks, insurers and asset managers in the portfolio of Robeco New World Financial Equities. Do expect a contrarian approach to the financial sector. “Investors need to consider the specific risk profile of this fund, though it's certainly not a downside. It is a solid investment fund of above-average quality that has earned the Morningstar Analyst Rating Bronze.”
Markets reacted strongly following the UK’s surprising vote to leave the EU. Yields of developed market government bonds came down significantly as investors fled into safe asset classes. Risky assets were under pressure. Credit spreads widened and the British pound experienced its biggest drop in 30 years versus the dollar.
Willem Schramade, Sustainability and Valuation Specialist in Robeco’s Global Equity team, recently published an article on ESG integration in the Journal of Sustainable Finance & Investment. In this article, he explains the Robeco Global Equity team’s advanced approach to ESG integration.
The Robeco Financial Institutions Bonds fund invests mainly in subordinated financial. The market for subordinated financials opened lower this morning, in line with other risky assets like equity. Throughout the morning prices started to recover a bit and we have seen buyers in the market. Market weakness was well spread, though obviously UK names underperformed.
High-quality European issuers in the high-yield market opened 2 points down this morning after UK’s vote on Brexit. This price reaction is not severe, especially if you relate this to the fierce moves seen in equity markets. We considered the order of magnitude fair, given the strong support by the corporate buying program of the ECB and healthy balance sheet of European BB credits.
New business models can be disruptive forces, wreaking havoc among the established order of firms. While new technologies in themselves sometimes do have disruptive potential, more often than not it is new business models enabled by new technologies that are the true source of disruption.
This study examines whether over thirty accounting-based fundamental variables known to be related to future stock returns are also effective for predicting future bond returns. The frequency of significant returns to trading strategies based on these anomalies turns out to be similar for the bond and stock markets.
The Central Bank of Nigeria ended a 16-month currency peg and moved to a floating exchange rate regime on 20 June. As a result, the Nigerian naira fell by 42%. This decision should boost Nigeria’s economic growth and foreign direct investments in the long run. However, Robeco Afrika takes a cautious stance until tangible improvements are clear.
Actively managing a portfolio’s sensitivity to interest rate movements is crucial for the returns on fixed income portfolios, as they are predominantly driven by changes in government bond yields. To forecast yield changes, Robeco developed a quantitative model in the 1990s, which has proven to have very good predictive power.
Blockchain’s ‘Administration 3.0’ will turn the financial sector upside down. But for banks, insurers and asset management companies this will not cause total disruption. Patrick Lemmens and Jeroen van Oerle look into the potential impact of blockchain and explain how investors can take advantage of this trend.
On June 23, 2016, the British will vote whether or not they want to remain a member of the European Union. In this article, three investors – Lukas Daalder, Mark Glazener and Kommer van Trigt - give their take on the consequences of a potential Brexit for, respectively, the main asset classes, global equities, and global bonds.
Investors increasingly decide to allocate strategically to factor premiums such as Value, Momentum and Low-Volatility. Robeco is now incorporating a fourth factor, Quality, in the investment process of its factor funds.
Research shows that factor investing strategies work well in corporate bonds, but actually building a portfolio requires greater care due to liquidity issues, Robeco’s quantitative experts argue in a new white paper.
Sweden is still the world’s most sustainable country, while the UK faces a stability threat due to the Brexit vote, and the refugee crisis is a major global risk, according to the latest RobecoSAM assessment.
The IMF’s April 2016 World Economic Outlook publication outlined how India will be the world’s fastest growing major economy through 2016-17 at 7.5% – something that has not gone unnoticed by fund buyers and investment professionals across the globe.
ETFs are rapidly gaining popularity, but do they ultimately benefit private investors? Using data from one of the largest brokerages in Germany, the authors in this study find that individual investors using these products do not improve their portfolio performance.
Real estate will be taken out of the financials sector to become a sector of its own as of September 2016. We expect this change to boost institutional demand for real estate, as investors will become more aware of its unique risk-reward characteristics.
Distributed ledger technology, such as blockchain, has been gaining a lot of attention as the underlying infrastructure of Bitcoin. Thanks to the open architecture of blockchain’s programming code, many alternative use cases are rapidly being developed. How will this impact the financial industry?
In his skeptical, contrarian and patient manner, Robeco Asian Stars fund manager Michiel van Voorst searches for companies that are wrongly undervalued. Join us on a contrarian investment journey through Asia. “China sometimes takes two steps forward and one step back, but the economy is reforming.”
Robeco Global Tactical Asset Allocation (GTAA) celebrates its fifth anniversary this month. And the icing on the birthday cake for investors has been a great track record, with consistent and considerable return in turbulent markets.
With financial technology, or ‘fintech’, banks, insurers and investment managers will not become superfluous. They will however be forced to make a strategic decision to invest in new technology to maintain their customer relationships. This is the view of Patrick Lemmens and Jeroen van Oerle of Robeco New World Financial Equities.
Victor Verberk is bracing himself for more market volatility for corporate bonds. As a bond investor, he is also a risk manager, and there is no shortage of risks at the moment. "But as active research-driven bond pickers, we love this market." The analysts at Morningstar gave his contrarian investment style a Bronze rating.
After four months of discussions in Brazilian Congress, Brazil's Senate concluded that President Dilma Rousseff should face a full impeachment trial. The emerging markets equity team is cautiously optimistic and has reduced its underweight in Brazil.
Last year was a perfect storm for Emerging Markets: concerns about China amid slowing growth, volatile domestic equity markets and the removal of the currency peg to the US dollar, along with weak commodity prices, the Fed hike and its impact on local currency depreciation all took their toll.
Investors looking for value in global equities have been disappointed in recent years, as ‘expensive defensive’ and growth stocks have held sway in markets. But over the long term, value investing can be shown to outperform growth investing, depending on the economic environment of the time, says Robeco portfolio manager Maarten Polfliet.
Worldwide, there are over 7.3 billion consumers. All of these consumers are spending and this gives rise to trends which you would, of course, like to profit from as an investor. This is exactly what the Robeco Global Consumer Trends Equities fund does: investing in lasting consumer trends and achieving an optimal return from this.
How should you go about investing in developments that will shape the future? Robeco trend investor Henk Grootveld has some answers. And Jack Neele explains how he reflects the digitalization megatrend in the portfolio holdings of his Robeco Global Consumer Trends Equities investment fund. The do's and don'ts of trend investing.
Portfolio manager Chris Hart of Robeco BP Global Premium Equities is proclaimed ‘European Fund Manager of the Year’ by Morningstar in the category ‘global equity’. “Hart has vast experience as an analyst and portfolio manager and has proven himself a talented stock picker. The returns of his fund are impressive.“
The Panama Papers appear to be yet another scandal in the banking sector. The relevance for us as investors is that if banks are found to have engaged in illegal tax evasion practices, their reputation will be damaged and they can face big fines. This affects profitability and debt repayment capacity.
Having been cautious on the asset class for years, we are becoming more constructive on local emerging debt because of its attractive valuations, the first signs of inflows back into the asset class and a recent improvement in fundamentals.
The much anticipated ‘Factor Investing – Collected Robeco articles’ (the 2nd edition) is now available. We’re delighted to present this book on factor investing, which brings together ten articles that Robeco researchers have published over recent years.
Oil is losing its power to shock as its risks have been better discounted into financial markets, while the passing of time will bring the positive impact of lower oil to the fore, says Robeco’s Lukas Daalder.
The current volatile markets provide plenty of food for thought for investors. To make better-informed investment decisions, Robeco has further developed its Dynamic Strategic Asset Allocation and Stress Test tools. "These analyses help a professional investor to make his portfolio more robust to cope with different economic regimes.”
In an environment of low yields, lower-than-average expected returns, rising volatility and increasing correlations between asset classes, investors are increasingly looking to diversify their portfolio away from their traditional equity and bond beta exposures.
There is strong evidence that momentum investing works, even though some critics claim that a stock’s past performance can’t be relied on to predict its future returns, and that momentum strategies can involve high turnover and the risk of a trend reversing.
Like many companies in the oil and gas sector, Shell is facing a constant stream of allegations related to environmental issues. Since the start of Robeco’s engagement programs in 2005, we have been in dialogue with this global energy company on several topics.
This study* shows that institutions typically trade on the wrong side of anomalies. For instance, they tend to buy growth stocks and sell value stocks, thereby going directly against the value anomaly.
While at Robeco we strongly believe in the benefits of taking a highly active approach to factor investing, there’s no denying that passive factor strategies are growing in popularity among many investors.
Rarely deviating from the index but charging for active management is something that ‘5 to 15% of active investment funds’ are guilty of, according to data published by the European financial watchdog ESMA in February. The regulator reviewed 260 investment funds, after the alarm was raised by Swedish investors.
Investors in high yield bonds should be careful that they do not get carried away by the unpredictable sentiment on financial markets. Sander Bus, Robeco High Yield Bonds portfolio manager, puts this investment category into perspective and looks ahead. "There certainly are investment opportunities among high yield corporate bonds, but it remains important to be selective."
The US presidential election race has turned in Hillary Clinton’s favor after she and her Republican rival Donald Trump won big victories in the ‘Super Tuesday’ primaries, says Chief Economist Léon Cornelissen.
In the volatile high yield bond market Robeco High Yield Bonds’ investment process has to prove its strength. Morningstar is convinced it can. “Because of its stable and experienced management team, solid track record and low costs, this fund deserves Morningstar’s Silver rating.”
Fears that the credit markets will be adversely affected much further by a Brexit are overblown, or at least have been priced in to a certain extent, as fundamentals are unchanged, says portfolio manager Victor Verberk.
Oil prices are at record lows, having fallen to levels of before the Great Financial Crisis. Four major OPEC members recently announced a freeze in production. Will the oil price find a bottom this year?
A study* by three Blue Sky pension provider researchers (Bastiaan Pluijmers, Imke Hollander and Ramon Tol) together with Dimitris Melas from MSCI compares the characteristics of nine different low-volatility strategies.
Integrated reporting, which combines financial and sustainability information, is starting to appear more on companies’ agendas. Although this is a step in the right direction, integrated reporting should not be the final objective, but rather a means of meaningful reporting, say financial analyst Johan van der Lugt and engagement specialist Daniëlle Essink.
If you believe in the January effect – the predictive power of the returns of the first month for the rest of the year – it is clear that 2016 is not going to be a very pleasant experience for a substantial part of the financial markets.
‘The king is dead. Long live the king!’ After years of being the company with the highest market value, Apple has been successfully dethroned by Google. Or rather, by Alphabet – as the company has officially been called since 2015.
Following allegations of human rights and environmental breaches against the Brazilian subsidiary of Bunge, we started an enhanced engagement with this global agribusiness company in addition to our dialogue on challenges in the soy and palm oil supply chain. The company has taken decisive action, showing good progress on our engagement objectives.
Japan’s surprise move to introduce negative interest rates will have little direct economic impact, but is great news for its battle against deflation and was cheered by investors, says Chief Economist Léon Cornelissen.
Investors are still operating in a difficult, volatile market. Investment strategists Han Dieperink (Rabobank), Nathan Levy (ING) en Pim Lausberg (ABN Amro) agree on this, but they also each add their own interesting nuances to the outlook for financial markets and investing.
We are already digital consumers and we are set to become digital producers. We are connected to the digital financial network and have a digital doctor who keeps an eye on us. Digitalization is the engine for economic growth and Henk Grootveld explains how investors can take advantage of this.
“Things aren‘t going well, but apart from that everything’s fine.” According to Robeco board member Hester Borrie, this quote – from Gerard Reve’s book The Evenings – perfectly encapsulates chief economist Léon Cornelissen’s view on the situation in the global economy.
The digital revolution will be a game changer in relationships between macroeconomic factors such as production, consumption, labor and inflation. Lukas Daalder outlines the effects on investors. “The disruptive effect of digitalization promotes the case for active equity investing.”
Economist Mariana Mazzucato, Professor of Economics of Innovation at the University of Sussex and author of 'The Entrepreneurial State' cannot repeat this often enough. Major innovators like Steve Jobs and Elon Musk are the heroes of their generation and yes, they have undeniably made a huge contribution, but the story we keep on telling each other isn't necessarily accurate.
The time when digitization was an activity for technology companies alone has gone. Technological innovation is no longer solely the domain of big internet companies and hip startups in Silicon Valley. More and more ‘normal’ companies, in a wide range of business sectors, are embracing technological developments.
The annual predictions season officially kicked off the moment we tore the last page off our 2015 calendar. Anything from simply making future projections based on existing movements and trends to coming up with top-of-your-head ideas for ‘black swans’ – unexpected events that could have a major impact.
In a recent webinar, Funds Europe spoke to Chris Hart, portfolio manager of the Robeco Boston Partners Global Premium Equities Fund, about how he seeks to tap into global opportunities from a value and growth perspective.
On January 7, the A-share market fell sharply after the opening bell. This triggered the new circuit breaker mechanism which had been implemented on the first trading day of 2016, freezing trading on the stock markets for the second time this year.
We firmly believe that ESG analysis, combined with traditional financial analysis, can offer investors powerful insights. With our proprietary Sustainable ROE Analyzer, we use ESG information to assess the quality and sustainability of Returns on Equity (ROEs) of property & casualty insurance companies
The Robeco Trading Desk executes around 22,000 quantitative equity orders a year. Robeco has traders in three different time zones around the world (Rotterdam, Boston and Hong Kong). This live presence enables us to monitor the executions closely and react immediately on price movements in stocks.
Distrust among the major protagonists in the healthcare supply chain is leading to costly inefficiencies for society. Better cooperation would have major long-term benefits for global access to care as well as innovation, says Stijn Vanacker, Healthcare Analyst in Robeco’s Global Equity team.
Low rates, rising equity prices and large corporate cash positions have created a favorable climate for mergers and acquisitions over the last year. Over three articles, Robeco’s equity investors first review the year, then look forward to see what investors can expect in 2016. Part 3: developments in the oil and gas, consumer goods and technology sectors.
Low rates, rising equity prices and large corporate cash positions have created a favorable climate for mergers and acquisitions over the last year. Over three articles, Robeco’s equity investors first review the year, then look forwards to see what investors can expect. Part 2: not more acquisitions in pharma sector, but of a different type.
Low rates, rising equity prices and large corporate cash positions have created a favorable climate for mergers and acquisitions over the last year. Over three articles, Robeco’s equity investors first review the year, then look forwards to see what investors can expect. Part 1: the wave of acquisitions in perspective.
New technologies are adopted at an increasing pace in the financial sector. Besides exciting new opportunities, they also introduce security risks. Financial institutions need to find a balance between security and convenience of use. This creates investment opportunities.
Credit growth in China and Quantitative Easing (QE) in the US, Europe and Japan were medicines that worked for a while. Cheap money kept zombie businesses afloat and prevented creative destruction. However, the commodity cycle has rolled over and the credit cycle is proceeding. Funding pressure is increasing, the US credit market is full of animal spirits and volatility is back.
Howard Covington was a founding shareholder and CEO of New Star Asset Management. He is now a trustee of ClientEarth, a not-for-profit environmental law group that uses the law to combat climate change.
On Sunday evening, December 13, South African president Zuma reappointed respected veteran Pravin Gordhan as finance minister to succeed David van Rooyen who had replaced Nhlanhla Nene three days earlier.
Although some see robots as a threat, they may also provide a potential solution to current problems, such as the lack of care for an aging population. This was the idea behind a lecture by Pieter Jonker, professor of Vision-based Robotics at Delft Technical University, in honor of the 50th anniversary of the growth fund Rolinco.
Solange Rouschop, global head of investment services and sustainability at ABN AMRO Retail and Private Banking, outlined to a recent RobecoSAM forum how her journey into sustainability investing began with a newborn baby in a polluted Chinese megacity.
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