Absolute-return solutions can help to make your portfolio less sensitive to the economic cycle. It's difficult to navigate through the rapidly growing range of funds, with a larger portion of these funds bobbing along with the market than the name would suggest.
Private equity has much in common with equity investment, given that both involve investing your own assets in businesses. The main difference is that in private equity a premium can theoretically be harvested due to its illiquid character.
The sudden decline of the renminbi sent a wave of uncertainty through international equity markets. But in the eyes of various specialists at Robeco, the decision to allow the Chinese currency slightly more freedom of movement deserves applause not panic.
The huge decline of Chinese equities is a sign of increasing market volatility rather than the start of a bigger correction, argues Lukas Daalder, Chief Investment Officer for Robeco’s Investment Solutions.
Hedge funds are surrounded by a certain mystique. There is something secretive about the way they operate. They are regarded as products that can make a profit irrespective of market direction. But are they really appropriate for an institutional portfolio?
The holiday season is always a good time to catch up on some reading, on the beach or on an aircraft flying off to sunny climes. We asked some key people at Robeco what they have read, or will be reading, while taking a much-needed vacation.
Its stable rental income makes real estate a popular choice in periods when interest rates are low. According to Folmer Pietersma, fund manager of Robeco Property Equities, real estate prices will not automatically come under pressure if interest rates start to rise again.
There is a clear relationship between the strength of a country’s ESG profile and its creditworthiness. From this perspective, it’s interesting to see that according to RobecoSAM, Ireland has caught up with Germany with regard to sustainability measures. The asset manager evaluates 60 countries in its yearly sustainability framework on a range of 17 environmental, social and governance factors. The April 2015 update of this ranking shows some interesting trends.
For our quantitative equity strategies we aim to minimize trading costs. We have developed our own trading cost model to estimate pre-trading costs. Trade evaluation results shows that we have realized cost savings of over USD 40 million for our clients over the 2009-2014 period.
Food companies are forced to re-evaluate their product portfolios due to the rising concern over whether they promote obesity. In the credit team we examine the downside risk of this trend on the companies we cover. Earlier this year, Robeco’s equity analyst, credit analyst and RobecoSAM sustainability analyst visited companies to discuss obesity related ESG considerations. This deepened our understanding of the companies’ efforts.
KB Financial is a financial conglomerate based in South Korea and parent company of Kookmin Bank, one of the largest banks in South Korea. Investors have long been concerned about the company’s corporate governance. After a relatively short engagement process, we were pleasantly surprised by the proactive stance of the company’s new chairman who announced various measures to improve the company’s governance.
In April 2010, the BP-operated Gulf of Mexico deepwater drilling platform Deepwater Horizon caught fire as a result of the Macondo well blowout, killing 11 employees and causing an estimated 4.9 million barrels of oil to spill into the sea. BP was confronted with litigation cases, fines, negative media coverage and a fall in its share price. This triggered us to start an engagement with 10 companies involved in deepwater drilling.
Most academic studies on factor investing are about equities. Patrick Houweling and Jeroen van Zundert show that factor investing also works for bonds. How has their research paper been used to create a fund?
In its outlook for the third quarter of this year, Robeco’s Global Fixed Income Macro team shares its views on Treasuries, credits and emerging debt and explains its positions in Rorento Global Total Return Bond Fund.
Increasing takeover activity, fluctuations in the oil price and an outlook of rising interest rates are creating new opportunities and dangers for high yield bonds: this is the domain of Sander Bus, fund manager of the Robeco High Yield Bonds Fund.
There are clear indications that the Federal Reserve is going to raise interest rates for the first time in more than nine years this September. Kommer van Trigt, manager of the Rorento Total Return Bond Fund, looks at the arguments for and the likely effects of a rate hike.
An increasing amount of scandals in the news have revealed the risks involved with data privacy. The topic of data privacy is however under-researched in the investment industry. As the risks can impact companies’ earnings, it is important to create more transparency. Engagement specialist Daniëlle Essink had the issue researched.
Very low interest rates mean investors are faced with a dilemma – be satisfied with minimal returns on safe bonds or move higher up the risk curve. Lukas Daalder, chief investment officer at Robeco, discusses the possible options in the current market.
A market strategist once said that “if you buy commodities, you are betting against the ingenuity of people”. When natural resources become too expensive, human resources step in to find alternatives, says multi-asset investment head Lukas Daalder.
European stock markets fell sharply as the extent of the problems in Greece became evident last weekend. Lukas Daalder, Chief Investment Officer of Robeco Investment Solutions, explains where the real issues lie, and what investors can expect in the days to come.
In our latest Credit Quarterly Outlook, we note two changes that are taking place in the credit markets. First, the US credit cycle is becoming unfriendly. Corporate releveraging is accelerating and margins have peaked.
In the recent-sell-off on global government bond markets, Robeco Lux-o-rente managed to maintain a positive year-to-date return with its active duration positioning. This illustrates the importance of an active investment approach.
Robeco has been proud to sponsor Team Brunel, the Dutch entry into the nine-month Volvo Ocean Race. In this edition of Time2Read, we include some stunning new pictures and new or updated stories that capture the highlights of the eight e-magazines that we have produced for the ports visited by the race.
Since January 2014, the Robeco fund’s investment cases need to include an assessment of how the most material ESG issues affect a company’s competitive position and target price. We can therefore systematically calculate the impact of ESG analysis on the portfolio.
In many countries, productivity growth has considerably declined in recent years. According to Peter van der Welle, strategist at Robeco, there is no cause for alarm. Thanks to the power of 'creative destruction', productivity growth will return to the usual level.
Interest in factor investing – investing in systematic sources of return – is rapidly increasing. Up to now most investor interest in this area has been focused on equities. But what are the possibilities for applying it to credits?
Robeco brings factor investing to credit markets, launching the Robeco Global Multi-Factor Credits fund on June 15, 2015. This credit fund allows investors to benefit from factor investing, which has been so successful in equity markets over the past years.
The case for financial bonds is more compelling than ever. Having learned some lessons in the Great Financial Crisis of 2007-2008, banks and insurance companies have been tidying up their balance sheets. While new regulations such as Basel III require new types of bonds to be issued that offer attractive yields, increased supervision and regulation will substantially lower the risk of default.
It’s easy to claim that sustainability is important. But it’s a lot harder to show it is, let alone quantify and monetize it. Willem Schramade, Sustainability and Valuation Specialist in Robeco’s Global Equity team, outlines the problems and the solutions to them.
Spain is in recovery mode, but has not been rewarded for this by equity investors so far in 2015. What is the outlook for the rest of the year? Robeco’s Chief Economist Léon Cornelissen explains why he is optimistic.
Conduct and litigation issues are a widespread phenomenon in the financial sector and because of the sheer size of the fines, they can have a material impact on a company’s ability to pay back its debt. We think that, despite recent improvements, these issues are here to stay for at least several years to come. Consequently, we spend much time analyzing related ESG factors to account for this risk in our credit investment decisions.
Trading is necessary to follow an active strategy, but excessive trading is linked to human behavior. In his new paper just published on SSRN Pim van Vliet looked into why investors trade and how much trading is needed for an effective low-volatility strategy.
David Pitt-Watson is Executive Fellow of Finance at the London Business School, and chairman of the United Nations Environment Programme Finance Initiative (UNEPFI). He is a former chairman of Hermes Focus Funds. In this Q&A, he addresses how sustainability investors can make have a huge influence on climate change policies.
Sustainable investment is growing rapidly. Although it has been growing fastest in the US over the past two years, Europe remains the undisputed leader, says Nicolas Bénéton, Sustainability Investment Specialist for Robeco France.
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.
Europe has seen a modest pick-up in economic growth in the first quarter, with unexpectedly strong figures coming in from France and Italy. But the region still faces an environment characterized by low interest rates with low expected economic growth and low inflation. This environment resembles the scenario Japan faced in the 1990s. What are the lessons for investors in low-volatility European stocks?
Institutional investors are attaching increasing importance to the sustainability of their investments. Whereas in the equity space, this trend has been going on for years, in fixed income investments sustainability investing has only recently started to generate widespread interest.
While the spotlights are still on Greece – as an escalation in various forms could still occur any day – two other large southern European economies are, nearly unobserved, finally showing signs of recovery.
A paper* argues that size, value, momentum and other factor portfolios might be considered as alternative building blocks for strategic asset allocation, because these offer an attractive risk premium and powerful diversification benefits.
Brunel has won the seventh leg of the Volvo Ocean Race. After an exciting neck- and- neck race with Dongfeng and Mapfre, skipper Bouwe Bekking and his crew finally crossed the finish line in first place.
Accumulating a supplementary pension, investing for your children's education or saving to pay off your mortgage – all require specialist knowledge. How can you accumulate capital yourself without losing sight of the right risk-return mix?
A paper* argues that size, value, momentum and other factor portfolios might be considered as alternative building blocks for strategic asset allocation, because these offer an attractive risk premium and powerful diversification benefits.
Companies operating on the cutting edge where the banking and technology sectors meet are very much in the public eye. Patrick Lemmens, fund manager of Robeco New World Financial Equities, sees interesting opportunities, but warns that investors should not get too carried away.
As the boats of the Volvo Ocean Race are reaching the coast of the ‘new world’, the global financial sector is coming to grips with a brave new world of its own. Long-term trends are changing the core of the financial industry and investors can benefit. Patrick Lemmens, fund manager of Robeco New World Financial Equities, explains how he does it.
April turned out to be a month with limited positive news across the board. US, Japanese and Chinese economic data all disappointed, while European data – although broadly still better than expected – failed to impress as much as it did in the first quarter, as analysts raised the bar with respect to European growth expectations.
The Volvo Ocean Race competitors have arrived at the sixth stopover port in the United States after three weeks’ sailing from Brazil. Our new e-magazine focuses on the US and what is still the ‘New World’ for investing after the financial crisis. Read how both Robeco and Team Brunel watch which way the wind is blowing for thematic investing and sailing respectively; find out how it is still the ‘US century’; and discover the ‘Mast-er’ Plan’ for mending battered boats.
The growth in global consumption will be driven mainly by emerging markets in the coming decade. The OECD predicts growth in Asia of no less than 571 percent between now and 2030, predominantly on the back of strong growth in China, India and Indonesia. How can investors use this to their advantage?
Although there are still some climate sceptics, most scientists share the view that man-made CO2 emission leads to global warming and climate change. This has led to efforts to reduce CO2 emission levels. As the car industry is one of the largest sources of man-made CO2 emissions, car manufacturers who can deal with this challenge in an innovative way, can be attractive for us as investors.
According to fund manager of Robeco Chinese Equities), Victoria Mio, Chinese stock markets will continue to enjoy a tailwind. The relaxation of the capital requirements for banks will act as a stimulus for economic growth.
My job as a portfolio manager does not just involve updating Excel spreadsheets at the office, I also regularly leave my desk to attend conferences and visit companies. These work trips offer an excellent opportunity to see how trends work in practice and help me to find the structural winners.*
In a unique cooperation between Robeco’s Governance and Active Ownership team, its Quantitative Equity team, RobecoSAM and Yifan Zhang from Tilburg University, we researched the link between gender diversity of company boards and stock returns. The results are promising: although we require more research to confirm the results, the data do show a positive link between board diversity and stock performance.
In 2010 a new financial term was born. The Brazilian Minister of Finance accused the US of fomenting a 'currency war'. The US started purchasing government bonds on a grand scale to stimulate the economy and this led directly to lower interest rates. This in turn caused capital to seek higher returns elsewhere and a subsequent weakening of the dollar.
In 2014 Robeco went live with its Factor Investing Solutions: tailored solutions based on multiple factors. “Robeco is not the founder of factor investing, but we are among the first to translate the theory into practical investment solutions,” says Robeco’s Head of Factor Investing Research Joop Huij with pride.
Navigating difficult waters. Taking risks – but only if they are justified. There are many parallels between investing and sailing. In this edition of the Volvo Ocean Race Update on RTL-Z, Arnout van Rijn, head of Robeco's Asia Pacific team in Hong Kong reveals how you can be successful in China.
The growing popularity of passive investing using index trackers has enabled many investors to access emerging markets, of which Brazil is a prominent member, at relatively low cost. However, trackers lack the positive exposure to factors which can identify the most attractive stocks.
In its outlook for the second quarter of this year, Robeco’s Global Fixed Income Macro Team sees opportunities in US, UK and especially Australian govvies, the long end of the European periphery and subordinated financials. Still, in all market segments it’s important to be selective.
For about a decade many investors believed investing in the four BRIC countries – a concept launched by Goldman Sachs Asset Management – was the easiest way to profit from growth in emerging markets. But times have changed. Simplification is not always the best approach.
S&P Dow Jones launched the S&P ESG Pan-Europe Developed Sovereign Bond Index on April 8. This first ESG-weighted bond index from S&P Dow Jones is based on the extensive ESG database of RobecoSAM, Robeco’s Zurich-based Sustainability Investing subsidiary.
The Brazilian economy is in dire straits. However, if the government moves forward with fiscal austerity, the economic and political crisis can be overcome, thinks portfolio manager Daniela da Costa-Bulthuis. Crumbling political support could certainly still throw a spanner in the works though.
Royal Dutch Shell is forking out EUR 64.3 billion for British BG in the biggest takeover in the industry in the last ten years, and is paying a 50% premium on its current share price. While this takeover is the biggest M&A deal this year and likely to remain so, it will certainly not be the last takeover in the energy sector.
We’re now a quarter of the way through the year, and it’s been a fairly bumpy ride so far. Geopolitical risk reemerged with the threat of a Greek exit from the Eurozone, while the US Federal Reserve more clearly outlined the criteria that would be used to trigger any future rate hike.
The Volvo Ocean Race competitors have arrived at the fifth stopover port in Brazil after three weeks’ sailing from New Zealand. Our new e-magazine focuses on Brazil, the ‘BRICs’ and investing in emerging markets. Read how both Robeco and Team Brunel manage risk on land and sea; see why there is no ‘Plan B’ for rescuing the Brazilian economy; and how three brave Team Brunel sailors finally achieved their dream of ‘Rounding the Horn’.
Recently Rikkert Scholten, Portfolio Manager Fixed Income, visited Australia to meet with, amongst other people, the Minister of Finance and central bank officials. The take-away from these meetings reaffirms the case for our investments in Australian government bonds.
There are finally some rays of light for the European economy. Even before the ECB started its Quantitative Easing (QE) program, consumer data surprised on the upside helped by a cautious recovery in labor markets and lower oil prices.
The renowned British physicist, Stephen Hawking, predicts that the advent of artificial intelligence will mean the end of mankind. Elon Musk, founder of PayPal and Tesla, thinks that robots could be potentially more dangerous than nuclear weapons. Dutch minister Lodewijk Asscher is somewhat less gloomy but feels that robots do pose a threat to employment.
On March 20, 2015 a solar eclipse will pass over the Atlantic Ocean between 08:40 and 12:50 CET and will be visible across Europe. The reduction in solar radiation will directly affect the output of solar (photovoltaics) electricity and for the first time this is expected to have a relevant impact on the secure operation of the European power system.
As the demographic dividend is used up in many Western countries and dependency ratios are increasing, the current set-up of many pension schemes is unsustainable. We see four trends that are likely to influence global pension systems. Fully integrated insurance companies, ICT providers and financial planners are most likely to benefit.
As a sustainable investor, Robeco is convinced that engaging with companies on the most material sustainability issues enhances their competitiveness and profitability. In addition, it generates measurable benefits for investors and society as a whole. We recently closed a successful engagement with mining company Freeport-McMoRan on its mining waste management in Indonesia.
Korea is a modern and wealthy country, but equities there trade at a significant discount. The reason for this – low dividend payments – is not going to go away any time soon. The idea of shareholder value has not yet found any traction in the minds of Korea's decision-makers.
Investing is a risky business. Before you decide to take on risk, you need to be convinced that it will pay off. Creative investors are not afraid to investigate exotic ideas in the search for a better understanding of how to limit risk. But would you make an investment recommendation based on the position of the planets? Or on the basis of a cyclically weighted average of the number of sunspots? Nor do I think that many of you would dare to bother a respected client with theories surrounding recent data on the orbits of Mars and Saturn.
Investing in a purely passive manner is increasingly popular. Although we do not deny that passive investing has its merits, we argue that enhanced indexing may be an even better alternative. It is supported by theory and evidence, allows for better ESG integration, and contributes to a liquid and efficient market.
The Smart Factory’, ‘Industrial Internet’, ‘Factory 4.0’: these concepts are all related to one of the most powerful secular trends in the global industrials sector: Industrial Automation. We have explored this topic in-depth, assessing how our funds can benefit. This journey led us to fascinating companies across the globe, ranging from highly secretive Japanese robot manufacturers to leading innovators in the US and Europe.
9 March 2009 entered the history books as the day on which equity markets hit rock bottom, a few months after the fall of Lehman Brothers and the deepest point of the financial crisis. On that day, the S&P 500 touched 666 points, rebounding from that moment on. This week – precisely six years later – the index is now 200% higher.
Commodity paradise Australia is suffering from lower prices for its natural resources. The economy is struggling to keep its head above water, but the country does offer interesting opportunities for fixed income investors right now.
Robeco is committed to sustainable investing. All Robeco Quantitative Equity strategies already integrated ESG factors (Environment, Social and Governance), and since December 2014, we have taken this one step further.
The dairy industry is faced with sustainability challenges such as food safety and greenhouse gas emissions. “Companies that are able to address these challenges can benefit from a fast-growing market with very good prospects,” says Jürgen Siemer, RobecoSAM’s agribusiness analyst.
Economic developments in Australia and New Zealand are not running in tandem. Commodity-price developments play a role, but this is not the only explanation, according to strategist Peter van der Welle.
While many institutional investors may have the ambition to integrate sustainability into their investment processes, they often don’t know where to start, struggling to make more concrete steps. “We can help them by making a step-by-step roadmap to implement sustainability investing and keep in control of their progress”, says Lucas van Berkestijn, Sustainability Investing Client Specialist for RobecoSAM.
Looking back at 2014, one of the more remarkable developments in the financial markets was the comeback of the US dollar. And we have not seen the end of it yet, thinks Peter van der Welle, strategist at Robeco.
In the Genesis video clip ‘The land of confusion’, the world is depicted by Spitting Image dolls of politicians who go about messing up the world in utter confusion. This video clip vividly came to mind when attending several ESG events.
Alea iacta est – that’s what ECB Chairman Mario Draghi must have been thinking when he announced the euro bond-buying program at the ECB’s press conference on 22 January 2015. The very same words uttered by his fellow countryman Julius Caesar in 49BC, when he crossed Italy's Rubicon river.
The drive to including sustainability factors into mainstream investing has become unstoppable – but investors approach it in different ways. Robeco recently held a series of round tables with existing and prospective clients to find out how investment professionals now tackle the subject.
Usually focusing on how to design the best low-volatility strategy, David Blitz, Matthias Hanauer and Pim van Vliet have set out to construct a very bad low-volatility strategy. Comparing good and bad low-volatility strategies they found very different performance characteristics. Clearly, not all low-volatility stocks are created equal. The results highlight the importance of being selective when investing in low-volatility stocks.
Suppose for a moment you are a Japanese investor. You don't believe in equities. Things were going okay some 25 years ago, but over the last ten years, it was basically a case of buying high and selling low. Even smart investors who bought in after the crash in the early nineties and didn't take any further action have gained nothing on balance.
Flexible bond funds have become increasingly popular. Being benchmark unaware, their portfolio allocation can shift quickly over time and across fixed income asset classes – and sometimes beyond. However, these dynamics and the diversity in flexible bond funds make them difficult to evaluate and compare. In our white paper ‘Navigating through flexible bond funds’, we provide a list of focus points that can help.
Markus Reichling is the European General Manager for Environmental Affairs at Panasonic, the Japanese electronics manufacturer. In this article he reveals how one of the world’s largest companies is developing modern business solutions for age-old sustainability problems, particularly in consumer products such as light bulbs.
Health & wellness considerations are increasingly important in a world where salt, sugar and fat (SS&F) make up the majority of packaged foods. Reducing SS&F is a challenge for food manufacturers because of costs and picky taste buds. Ingredient companies hold the key.
Some argue that the mere mechanism of rebalancing increases returns, and that this explains the success of factor investment strategies. Although factor strategies do need rebalancing to maintain their exposures, there are several reasons why it is unlikely that this is their source of added value.
Tightening legislation on toxic chemicals has an important impact on chemical companies. As consumer awareness on the dangers of certain substances grows, companies are evaluating the negative impacts of hazardous chemicals on their image and competitiveness.
Water is a precious resource in short supply. Long-term trends such as population growth, increasing water consumption per person, and pollution are major drivers of water scarcity. This is aggravated by an inadequate water infrastructure.
Government bonds posted strong returns in 2014 as yields declined in the US, Germany and Japan. The duration model performed well as it captured these moves in the second half of the year and in the first months as well.
China’s rapid growth is now being fueled by e-commerce as the country becomes more consumerist, says Chinese Equities portfolio manager Victoria Mio.
Bart van der Grient explains how Robeco ensures good data quality, which is vital for selecting stocks and conducting empirical research. “Our approach makes the stock selection and portfolio construction process more transparent,” he says.
The year has only just started but it already seems to have lasted an eternity. The oil price has not rebounded and interest rates have just carried on falling. The equity markets experienced corrections, but bounced back just as quickly. What else does 2015 have in store for us?
Robeco High Yield Bonds recorded a total return of almost 4% gross of fees over 2014, outperforming its underlying benchmark by 150 basis points . Over a three-year period, the fund also recorded a remarkable performance of 9.97%% annualized, against 8.54% for the benchmark. This puts it in top place amongst its peers (source: Morningstar).
Chinese economic reforms continue, but the authorities are going about it carefully. After all, they don't want to risk missing their growth targets. Oil-price declines and the US growth recovery are providing some welcome wind in China's wings.
The Volvo Ocean Race competitors have arrived at the third stopover port in Sanya, southern China, after a month at sea sailing from Abu Dhabi. Our new e-magazine focuses on opportunities in China and Asia, one of the greatest growth areas in the world. Find out why China has adopted a ‘gently does it’ strategy; how e-commerce is leading growth as a cultural lifestyle; and why we believe some things are more equal than others.
What effect will the divergent policies of the Fed and the ECB have in 2015? Robeco expects that this could have a negative influence on the stock markets, while two major banks have a different opinion.
Capitalism is a complex system and easily misunderstood. But it’s still the best we have available, says economist and bestselling author Ha-Joon Chang. There is the constant necessity to improve it, though.
The Shanghai stock market ended 2014 with an impressive 53% gain for the year, but Victoria Mio, portfolio manager Robeco Chinese Equities, thinks the rally can continue. According to Mio the past year marked ‘the beginning of a multi-year bull market’ in Chinese A-shares.
Former European Commission President Barroso thinks that Europe should bridge its internal differences. Unity seems a long way off – with controversy over budget policy and threat of British and Greek secession from the union. Why is Robeco Chief Economist Léon Cornelissen not too worried about these issues?
Intensified legislation on toxic chemicals impacts chemical manufacturers and retailers. As consumer awareness grows, these companies are evaluating the negative implications of hazardous chemicals for their image and competitiveness. At the same time, they are investigating opportunities to develop less toxic alternatives. We believe investors should be considering these implications in their analysis. The topic provided a nice platform for trying a new engagement tool: a roundtable with chemicals companies.
Low-volatility investing is a great place for investors and researchers. For long-term investors, it can create a simple tilt that offers an attractive alternative to following market capweighted equity indices, generating at least the same return for two-thirds of the risk.
Although most factor research focuses on the equity market, the concept and benefits of factor investing apply equally well to the corporate bond market. A smart way of investing is combining the factors into a multi-factor credit portfolio in order to diversify across factors.
The Fundamental Law of Active Management by Grinold and Kahn is designed to assess the value of active management, as expressed by the information ratio, using only two variables. The first is the portfolio manager ‘skill’ in selecting securities and the second is the number of independent investment opportunities.
The second edition of the first and only book to focus on the volatility effect, "Low-Volatility Investing" by David Blitz, PhD, Head Robeco Quantitative Equity Research and Pim van Vliet, PhD, Senior Portfolio Manager, Robeco Conservative Equities, presents our research on low-volatility investing from a number of different angels important to investors.
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