Korea is a country of hard workers and heavy drinkers. According to the Organisation for Economic Cooperation and Development (OECD), people there work 50% longer hours, and according to the World Health Organization (WHO), 25% more alcohol is consumed there per adult than in the Netherlands. Indeed, there's an interdependency there: no sooner is their long office day over, Koreans start overindulging in the traditional soju (rice wine) over dinner with clients and colleagues, and later drink excessive amounts of whiskey and cognac at a night club.
Long-term interest rates remain low, thanks in part to the central banks. But what if they change their policy? The Bank of England is moving in that direction and might just give us a 'sneak preview' shortly of what interest rates are likely to do in the US.
Low-volatility stocks are in high demand. According to Pim van Vliet, portfolio manager of Conservative Equities, a generic low-volatility strategy is getting more expensive. An enhanced approach is necessary to prevent buying too expensive stocks.
The official results from the Indonesian presidential elections confirmed that Joko Widodo (Jokowi) won with a convincing margin. We consider this a positive development but wait for concrete signs of structural reforms before changing our neutral weight in Indonesia.
Choices relating to asset allocation have major effect on the risk/return characteristics of investment portfolios. New academic insights have led to important innovations in this area. One of these is implementing a market view in a risk-parity portfolio.
Robeco’s quantitative duration model drives the performance of quant duration solutions such as Robeco Lux-o-rente and Robeco Flex-o-rente. We monitor the performance of the model and regularly investigate in which circumstances the model performs well and which conditions are more challenging.
Getting the timing right is essential for any investor trying to follow the simple rule of buying low and selling high to maximize returns. Achieving it can be quite difficult however given the multitude of factors that affect asset prices on a day-to-day basis.
Hedge funds are generally known for their unconstrained, aggressive investment style, their high costs and divergent return profile. But what does this mean in practical terms? What real use are hedge funds in the portfolios of institutional investors such as pension funds?
The market value of companies is increasingly being determined by their intangible assets. Personnel is one important component.
Lasting two hours, it was one of the longest Budget speeches in India’s history. Forty-five days into the job, India’s Finance Minister, Mr Arun Jaitley, presented his maiden Budget proposal, which laid the foundation for the Modi-led government’s development plans. The proposals addressed many economic and social issues while focusing on maintaining fiscal discipline.
The financial materiality of ESG has become much more important as companies and investors realize that sustainability raises profits and returns. But sustainability still needs to become a rational economic choice in itself, and gain wider public acceptance, to tackle the short-termism that still exists, says Responsible Investor’s Hugh Wheelan.
Helena Viñes Fiestas, Head of Sustainable Research (SRI/ESG) at BNP Paribas Investment Partners, explains how the drive to make buildings more sustainable can benefit real estate owners and investors.
The prospect of the first interest rate rises for many years as economic growth improves has led many investors to question their high yield strategies. Deciding what type of fund to be in depends on your outlook.
The development of new cures for severe diseases and the aging of the population have blown up healthcare costs. Fortunately, new tools and technologies promise to enhance productivity and improve healthcare quality.
The ESG ranking of a number of euro periphery countries has improved, after having reached a low in 2010. These changes give information on developments in a country’s investment risk. We use this information to identify trends in, for instance, the political climate that are relevant for our investment decisions.
In May 2014, Narendra Modi was elected the new Prime Minister of India. Will he be able to repeat his strong 12-year economic track record as governor of Gujarat on a national scale? Karnail Sangha traveled to India to gauge the impact of this ‘transformative change in leadership’ and identify the related investment opportunities.
As a result of the finite supply of oil and gas, and the political struggles in many of the producing countries, innovative solutions such as oil sands and shale gas have been gaining ground. Interesting for investors, but at the same time also a possible source of sustainability risk. It is therefore important for investors to enter into a dialogue with oil and gas companies.
It is June and I have an uneasy feeling about the markets. We are already half way through the year. The season urges me to exercise caution, with profundities such as: ‘Sell in May and go away’, or ‘Investment is a winter sport’.
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Our insatiable hunger for energy has highlighted the need for more energy-efficient solutions. RobecoSAM explains how LED lighting technology can help reduce our energy consumption while massively cutting the street lighting bill of towns and cities. Watch the video.
Over 30 institutional investors joined forces to raise some pertinent issues with the executive board of Hon Hai Precision, also known as Foxconn. “This collaboration is a powerful way of making shareholders’ concerns heard,” says engagement specialist Peter van der Werf. “And it illustrates the growing importance of corporate governance in the Asian region.”
On the road with: After three days full of occasionally incomprehensible jargon and obscure scientific formulas, it finally dawned on me. Most of the companies I observed at my conference on health-care and biotechnology are afflicted with a disease for which a pill will never be the cure: the sickness of complicating matters that are really quite simple.
The development of new cures for severe diseases and the aging of the population have blown up healthcare costs. Fortunately, new tools and technologies promise to enhance productivity and improve healthcare quality. Henk Grootveld, Portfolio Manager of Rolinco and Robeco Global Growth Trends Equities, and Steef Bergakker, Robeco’s Trend Analyst, discuss these exciting new developments and the arising investment opportunities.
Returns on capital exceed the rate of economic growth, concentrating wealth and income among the rich. That is the central assertion of Piketty's book ‘Capital in the Tweny-First Century’. The book's title refers to the social development that capital is the dominant factor of our time once again.
In its outlook for credit markets in the third quarter of 2014, Robeco’s Credit team points out that extremely dovish banks have made investors complacent. The price of money is zero and even negative on a real basis. The search for yield is still on.
The future earning capacity of the workforce varies according to the profession and the individual. In the case of both collective DC schemes and individual life-cycle investment plans, this impacts the investment mix.
In 1999, fifteen years ago, Robeco found that quantitative stock selection techniques known to be effective in developed markets are also able to deliver superior investment results in emerging markets. What are the biggest takeaways from the research done and how does the model work in practice?
After the crisis of 2008, the heads of many pension funds must have been asking them themselves: “Are we investing in the right way?” Factor investing – the strategic top-down allocation of assets to factors such as ‘value’ and ‘momentum’ – has since then moved to the top of the agenda. And Dutch pension funds are leading the pack. But how do they do it and what lessons can other funds learn from them?
The European Central Bank (ECB) should not now need the ‘nuclear option’ of full quantitative easing as growth returns to the Eurozone, though the door remains open for it, says Robeco’s chief economist.
Investors increasingly embrace “smart beta” investing, by which we mean passively following an index in which stock weights are not proportional to their market capitalizations, but based on some alternative weighting scheme. Examples include fundamentally-weighted indices and minimum-volatility indices. In this whitepaper we first take a critical look at the pros and cons of smart beta investing in general. After this we successively discuss the most popular types of smart indices that have been introduced in recent years.
Google’s inexorable rise to knock Apple off its perch as the world’s most valuable brand comes as no surprise to Robeco fund manager Jack Neele. His Global Consumer Trends Equities fund invests in Google but gave up on Apple some time ago.
The Volvo Ocean Race 2014-15 marks the next stage in Robeco’s own voyage to grow our company and promote our brand to a global audience. So we are very proud to be an official sponsor of Team Brunel, the Dutch entry into this awe-inspiring round-the-world challenge.
On the road with: In the week that 72-year old Chairman Lee of the Samsung ‘chaebol’, the largest South Korean conglomerate, was admitted to hospital with serious heart problems, I visited the Samsung Electronics Investors Forum in Hong Kong. Is the conglomerate in good shape for the future?
The European periphery was the clear outperformer in the first quarter of 2014. Kommer van Trigt thinks this will stay a while, because growth is improving and central banks will keep interest rates low.
Throughout the world policymakers are introducing new regulations to combat climate change. This is having a direct effect on the credit quality of companies and even entire sectors. It is therefore essential for corporate bond investors to look at ESG factors.
Investors are looking at emerging markets again after equity values have risen following months of underperformance. Part of the reason is that they have higher growth potential than Western stocks and offer “cheapness all over the place”, says Robeco’s leading specialist on the asset class.
In 2010, the RobecoSAM sustainability scores were integrated in the stock selection model which is the performance driver of Robeco’s Enhanced Indexing strategy. Research shows that his has contributed to the strategy’s strong performance since then.
Behind the expression the Internet of Things lies a whole new world of opportunities. It stands for convenience, increased productivity and many other aspects that can keep analysts in the investment world busy for many years to come.
As a visitor to Japan, amazed by Japanese society, you inevitably think of Bill Murray in the film 'Lost in translation' as you return to your hotel room. And the country's economy never fails to elicit a similar feeling of wonder.
Companies hold the key for improving sustainability practices, says Peter White, Chief Operating Officer of the World Business Council for Sustainable Development (WBCSD). Here he explains how some companies are gearing up to meet some tough challenges, whereas others are falling behind.
Passive investing has become increasingly popular. Despite its undeniable appeal, there are also some considerations which should make investors think again about the desirability of a passive approach.
Positive market sentiment in India is founded on hopes that a new government will prove capable of tackling the weak economy and endemic corruption. But equities are expensive, while a favorable election result is in no way a sure thing.
Climate change can pose significant investment challenges. Therefore, companies’ CO2 management is a recurring theme in RobecoSAM’s engagement program. As the real estate sector represents over 10 % of annual global emissions of CO2 and other greenhouse gases, engagement specialist Sylvia van Waveren has started a three-year engagement with companies in this sector.
How do we as investors want a company to behave? What are the characteristic features of a responsible company? What kind of corporate conduct contributes to a sound risk-return profile for a company over the longer term? The international principles of the UN Global Compact constitute an effective checklist for addressing this type of question.
Water is a precious, yet finite resource essential for life, with no adequate substitute. Supplying and allocating water of adequate quality and in sufficient quantity is one of the major challenges facing society today. Watch the video.
Robeco introduced Robeco Quant High Yield Fund on March 28, 2014. By investing in credit default swap (CDS) indices, this fund offers liquid exposure to global high yield, allowing investors to tactically trade in and out of this asset category at low costs. Performance is driven by a proprietary quantitative market-timing model with a solid track record of over ten years.
Investors should recognize that human psychology plays a role in decision making, says Paul Craven, an expert on behavioral finance. “In order to be a successful investor it is important to challenge your own instincts and assumptions.”
You would not be pleased if you thought you had the right exposures to factors that drive expected returns, but it turns out you actually have precisely the opposite tilts. This is happening quite often though. Quantitative researcher Joop Huij and head of equity research David Blitz argue that institutional investors should be careful when assessing asset managers.
For investors looking at the world’s two most populous markets, China is years ahead of India, which is more comparable with an African country, says globalization and international relations expert Parag Khanna.
RobecoSAM’s engagement on the soy supply chain has now been active for around 15 months. During this time we have undertaken conversations with the companies selected for engagement and covering the targeted areas of the soy supply chain. Our conversations have highlighted structural hurdles to addressing sustainability, and a lack of alignment in the motivation of supply chain actors to address the challenges of certification.
The outlook for emerging markets is a hot topic among investors. Paul van Homelen, portfolio manager Robeco Emerging Market Equities, argues that the worst is over and sentiment is set to improve.
We live in a world of constant change, and so many innovations have enhanced our quality of life. But the success of technology depends on their acceptance by society, argue futurist Ben Hammersley and Robeco portfolio manager Jack Neele.
Financial markets can overreact to positive and negative news, with disruptive effects for a country, as was experienced by George Papandreou when he was prime minister of Greece. ‘We need to bring markets and politicians together’, says Papandreou in an interview.
In the United States, capital expenditure is lagging the economy as a whole. Some think this is the ‘new normal’. But Robeco’s strategist Peter van der Welle believes there is a strong case for a rebound in investments later this year.
According to international shareholders' guidelines, South Korean companies are generally not sufficiently transparent in reporting their financial results. And the annual reports are often not audited in time for shareholders when they have to cast their vote digitally at shareholders' meetings. Clearly, an audited annual report is an essential source of information for shareholders in order to be able to cast a well-considered vote at annual meetings.
The effects of the last major financial crisis have been far-reaching for banks and insurance companies worldwide. Investors tend to look at the negative aspects, like higher capital requirements that put pressure on returns. "But regulation creates opportunities too", says portfolio manager Patrick Lemmens of Robeco New World Financials Equities, who received the Lipper Fund Award on 31 March for his fund's strong track record.
How do you as an investor deal with unpredictable political and regulatory developments? Can financial crises be prevented? Bond investor Victor Verberk looks for and finds answers to these questions in the science of ‘behavioral finance’.
George Papandreou, prime minister during the Greek government debt crisis and keynote speaker at the Robeco World Invested Forum 2014, warns of the influence of financial markets. Robeco’s Chief Economist Léon Cornelissen disagrees, arguing that we should worry more about the unchecked power of central banks.
Investors tend to underestimate trends. The focus is often on factors that move the market in the short term. But what long-term trends will have an impact on investors’ portfolios? See the infographic to find out more.
I won't beat about the bush - we are coming to the end of the bull market for corporate bonds. Investors are still squeezing out what they can, but the end is in sight, and the question is how best to prepare for this.
RobecoSAM assessed the financial materiality of health and safety for the textile sector. Supply chain management is a key long-term sustainability factor with subcontracting being one of the biggest risk components. Based on this research Robeco started a three year engagement with eight companies in the sector.
The almost peaceful annexation of the Crimea and the mild sanctions by the West mean that tensions in the conflict between Russia and the Ukraine have eased. Although chief economist Léon Cornelissen does not expect them to reintensify soon, financial markets are taking very little account of an unfavorable scenario.
In its outlook for the credit markets in the second quarter of 2014, Robeco’s Credits team warns of complacency by investors. Remarkably, euro and US credit markets have continued to rally in an environment of rising geopolitical and macro-economic tensions. This is all to do with capital flows back into developed markets and a search for yield.
There are doubts as to the health of the Chinese economy. Cracks are starting to appear in its shadow banking system. The country still has sufficient means to prevent a financial crisis, but the situation will remain unsettled for a long time yet.
Fed chair Yellen unintentionally linked the timing of the first interest-rate hike in the US to the end of the tapering process. Analysis of a broad set of indicators is now even more essential for an effective assessment of Fed policy.
Investors are always keen on drivers of the market. Most often they are focused on short term drivers, like announcements of the Federal Reserve on scaling down its bond buying program, or on the stress tests of European banks, the latest growth figures of China, or elections in Brazil.
Great companies that turn an industry upside down can come from anywhere, and the next Microsoft or Google is just waiting to be found. To find them, you need to be more aware of talent than of location, says entrepreneur Niklas Zennström.
Niklas Zennström, a co-founder of Skype, runs investment firm Atomico, which is trying to find and develop the high-tech winners of tomorrow. Atomico invests in Rovio, the company that operates the successful Angry Birds franchise.
Sustainability Investing is a long-term trend that is gradually moving from a niche to a mainstream form of asset management. So says Michael Baldinger, chief executive of RobecoSAM, which is a pioneer of the concept.
The sell-off in emerging markets has led to comparisons with the Asian Crisis of the late 1990s. A global recovery will not be the panacea for emerging economies, but there are still potential catalysts for recovery and reasons to be optimistic, says Peter van der Welle, Robeco strategist.
Further escalation of the situation in Ukraine is not very likely. Its impact on the financial markets will therefore probably remain minor. Léon Cornelissen and Frank Reynaerts explain the situation, but also highlight the uncertainties surrounding this scenario.
Robeco has various tools at its disposal to engage with companies. One of them is a collaborative engagement, in which Robeco joins forces with other investors to achieve a certain goal. Recently Robeco successfully participated in a collaborative anti-corruption engagement.
Sustainable management of the electronic equipment supply chain is becoming increasingly important. Not only is the lifespan of electronic products notoriously short, but there are increasing concerns about electronic waste, controversial labor conditions, the use of chemicals and the amount of energy these electronics require when in use. All factors to take into consideration when making investment decisions.
Increasing regulation costs the investor money, but offers little extra protection. Normal interest rates are more likely to ensure this than the regulators are.
The current stock market turbulence creates opportunities for stock pickers who look for dislocations between corporate reality and market froth. That’s the conviction of Robeco Boston Partners’ Chris Hart. The portfolio manager, who has been nominated for the Morningstar Awards nine times in Europe, reveals the secrets behind his outperformance.
Europe currently offers a better investing environment for corporate bonds compared with the US as companies are more conservatively managed on this side of the Atlantic, according to fund manager Sander Bus.
For the energy sector we expect a strong performance by the Majors in 2014. They will put more emphasis on curbing expenses and improving free cash flow.
Factor investing is in vogue. Investors are increasingly focusing on factors such as value, low volatility, momentum and small cap. But what do we know about the relevance of factor investing?
Interest in factor investing - investing in systematic sources of return - is rapidly increasing. But how are pension funds incorporating factor investing into their portfolios and investment processes?
Citywire AAA-rated Pieter Busscher, who runs the top-performing RobecoSAM Smart Materials Fund, reveals why he is seeking to exploit recovering airline stocks and discusses the US auto sector's urgent need to adopt lighter and smarter materials.
Elections in four of the world’s largest emerging markets will set the tone for investment strategy this year. Our emerging market equities portfolio specialists discuss the likely outcomes and consequences of polls in Brazil, India, Indonesia and South Africa.
Taking a more sustainable approach is gaining more attention in the fixed income market. Edith Siermann, CIO of Fixed Income Investments at Robeco, answers investors’ questions on how Environmental, Social and Governance (ESG) principles are applied to the range of products under her wing.
Robeco’s proprietary quantitative duration model fully determines the active duration positions in Robeco Lux-o-rente and Robeco Flex-o-rente. On balance, the model’s performance was negative over 2013.
Sustainability is no longer a top-down initiative driven by pension funds. Pension fund beneficiaries increasingly demand it themselves. Want to know why? Check out the new edition of Advance, RobecoSAM's sustainability investing magazine.
Sustainability investing is often seen as a ‘top-down’ initiative, where pension funds instruct their asset managers to include it in the investment process. But it is increasingly being driven by ‘bottom-up’ pressure, where fund beneficiaries themselves demand it for their own varied reasons.
Kerrie Waring is the new managing director of the International Corporate Governance Network (ICGN), having served the organization as chief operating officer since 2008. In this question and answer session she addresses some of the major issues affecting corporate governance, from globalization and attitudes reform, to the future role of women on boards.
A vast majority in the investment world agrees on the direction that equity markets will take this year. Many are optimistic. As long as central banks continue to provide 'free money', they will be right, says Mark Glazener.
Voting at Annual General Meetings (AGMs) is becoming increasingly important. This would be a good development, if it weren’t for some glitches in the voting infrastructure. Engagement specialist Michiel van Esch, a member of the PRI Vote Confirmation Steering Committee, says investors need to take responsibility to make sure that the votes they want to cast are actually cast.
Climate change has the potential to completely overhaul the energy sector. “To avoid underestimating this source of systemic risk, investors in the sector have to look at long-term energy and climate challenges”, says Dirk Hoozemans, energy analyst at Robeco.
Investors in the pension world share Robeco's expectations that average returns will be relatively low in the coming five years. This is why they wish to take an active approach to changing market conditions and the opportunities offered by new technologies and themes.
Czech economist Tomáš Sedláček suggests that politicians have a growth fetish. Sedláček's ideas on the relationship between politics and budgetary policy are just as controversial as his notions on the economy, as revealed in an interview following his presentation during Robeco Live.
Today, RobecoSAM published its annual Sustainability Yearbook which looks back at companies’ sustainability performance in 2013 and ranks them as Gold, Silver or Bronze and identifies an Industry Leader for each of the 59 industries.
The most probable scenario for 2014 is ongoing global economic recovery and further share price rises. But how reliable is this? Chief economist Léon Cornelissen and strategist Peter van der Welle identify three downside risks.
With its quantitative easing programs, the Fed has distorted bond markets, especially by reducing volatility. This has negatively affected the performance of the duration model.
Efficient investors don't check their portfolios too frequently. Once a year is enough, and around New Year is a good time.
Inflation used to be the main focus for European central bankers’ interest rate policy as prices rose forever upward. Now their main fear as we begin 2014 is the reverse scenario - the risk of deflation.
Ground-breaking research by Robeco that changed the way the riskiness of corporate bonds can be evaluated has celebrated its 10th anniversary. This riskiness needs to be carefully calculated as bonds issued by companies have a greater chance of defaulting than government bonds. Their returns can also be more volatile, as they are linked to the underlying performance of the company that issues the bond.