The Volvo Ocean Race competitors have arrived at the fourth stopover port in Auckland after a month at sea sailing from China. Our new e-magazine focuses on the varied investment opportunities 'Down Under'. Read more ...
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.
Some graphs are informative, some are just interesting to look at and some are simply misleading. Or, at least, the interpretation they are given is misleading. We have another example from this last category today.
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.
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 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.
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.
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.
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.
Last June, British newspaper The Guardian reported that farmed prawn producer Charoen Pokphand Foods (CP Foods) buys fishmeal from some suppliers that own, operate or buy from fishing boats manned by slaves. An investor coalition headed by Robeco subsequently started an engagement with CP Foods.
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.
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.
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.
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.
China’s rapid growth is now being fueled by e-commerce as the country becomes more consumerist, says Chinese Equities portfolio manager Victoria Mio.
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.
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?
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.
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.
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).
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.
Robeco Chief Economist Léon Cornelissen discusses the book Economics – The User's Guide written by the development economist Ha-Joon Chang. Chang is one of the main speakers at Robeco Live, the event where Robeco explains the investment outlook for 2015. “Chang has succeeded admirably in his ambition to write an accessible introduction to economics,” says Cornelissen.
How should pension funds deal with the risk of rising interest rates on the capital markets? Is it sensible to hedge interest rates or should we focus more on inflation risks? Three experts highlight the interest rate related issues for pension funds in the light of the new Financial Assessment Framework.
The use of portfolio rebalancing as a profitable strategy (or ‘volatility harvesting’) is a hot topic. Indeed, it is interesting to know what the impact of periodic rebalancing is on the growth rate of a portfolio.
In China, 2015 is the year of the sheep. It’s an animal liked by most people, white and soft, and associated with positive things. At the same time a flock of sheep has a tendency to herd. That is what is happening in markets as well. Markets are positive, equity markets set new highs, and most people might be long credit risk too given a long period of low yielding alternatives. Robeco’ Credit team still considers this the correct position going into 2015.
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. A good example is our current engagement with Taiwanese electronics company Hon Hai.
The oil price has reached its lowest level in five years and Brent crude fell as low as USD 65. The lower oil price has been welcomed in the West, but it is having a major effect on some OPEC countries. The pain within OPEC – which includes the United Arab Emirates – is not evenly divided, as some can cope with depressed prices better than others. However, the effects of a lower oil price on bonds and equities are mostly positive, explains strategist Peter van der Welle.
Kommer van Trigt, portfolio manager Rorento – Total Return Bond Fund, reflects on macro-economic developments, the opportunities in the bond market and the need for a flexible approach.
Robeco Enhanced Indexing invests in global developed markets equities, and has a low tracking error against its benchmark, the MSCI World index. In recent years, performance has been strong. In this article we focus on one element that distinguishes Robeco’s strategy from those of others: our short-term stock selection model (SHOT).
Richard Koo, chief economist of the Nomura Research Institute, was a keynote speaker at a recent conference for Robeco’s investment professionals. In this Q&A he explains why Europe’s situation is already worse than Japan’s ‘lost decade’ and why he believes QE is not the answer unless the issue of deleveraging is addressed.
What started out as a gradual decline in the oil price has in recent weeks developed into a real selling frenzy. Since mid-June, oil prices have dropped by 40%. Last week’s decision by OPEC not to cut production levels was the final straw that pushed oil below the USD 70 mark, the lowest level since 2009. There were two main reasons behind this correction – declining demand due to the weak growth prospects of the world economy and rising supply linked to the shale gas revolution in the US.