Robeco Group reports Full Year Results 2011: Robust 2011, good start to 2012
Robeco Group announces results for the full year ended 31 December 2011.
Rotterdam, 29 March 2012 - Robeco Group announces results for the full year ended 31 December 2011. Robeco Group had a strong year, with net cash inflows at a record level of EUR 7.6bn increasing assets under management to EUR 150.3bn, despite turmoil in financial markets affecting investment performance. Further net inflows in January and February of 2012 (EUR 14.8bn) have increased assets under management to EUR 176bn at 29 February 2012.
EUR x million 2011 2010
Assets under management (EUR x bn) 150.3 149.6
Management and performance fees 914.2 932.8
Operating income 680.3 763.6
Operating expenses -482.0 -482.3
Operating profit 198.3 281.3
Non-operating profit 5.4 -24.7
Taxes -69.9 - 75.3
Net profit 133.8 181.3
Commenting on the 2011 Full Year Results, Roderick Munsters, Chief Executive Officer of Robeco said:
- AUM grew with net cash inflows of EUR 7.6bn; with clients attracted to Robeco Group investment products and solutions, despite difficult market conditions
- Institutional clients particularly contributed to strong inflow
- Institutional assets under management increased to 48% as per year-end 2011 (2010: 46%) and to 51% as at the end of February 2012
- Lower performance fees led to decline in asset management income and profit
- New conservative equity and emerging markets funds launched
- EUR 1.2bn of assets under engagement mandates won in 2011
- Strong start to 2012, AUM increasing from EUR 150bn to EUR 176bn at Feb 29, 2012
“2011 was a year of two halves, with the Euro crisis in the second half inevitably having a detrimental effect on stocks, leading to declines in both developed and emerging markets. There were successes in other asset classes however, with long term bonds of credit worthy European countries and the USA offering good returns in 2011, helping Robeco's bond funds deliver strong performance. In 2010, Robeco set out a four year strategy aimed at helping our clients achieve their investment ambitions and increasing profitability, by focusing on cost efficient growth. Two years into the plan, we have been able to achieve our asset growth targets while we continued to improve efficiency, with the implementation of measures to reduce IT and operations expenses. Further strategic actions will be undertaken in the years ahead.
Although financial markets are likely to remain volatile, it appears that investors are ready to add some risk to their portfolios and thus far, 2012 inflows are very encouraging and many of our investment strategies have had a strong start to the year. We remain cautiously optimistic, our optimism buoyed by a strong start to the year and the cost efficiency measures we have implemented positioning us well for growth.”
Operating income decreased by EUR 83.3mn to EUR 680.3mn (-10.9%) in 2011. Although management fees increased, the net fee from asset-management activities decreased by EUR 44.0mn to EUR 631.2mn due to substantial lower performance fees. As a result, net profit declined to EUR 133.8mn in 2011 from EUR 181.3mn the previous year.
The increase in management fee income was a direct result of higher assets under management during the year due to the positive net investment result and significant net cash inflow. This increase was offset by the impact of the increase of the US dollar during 2011. Lower performance fees were the main reason for the decline in income from asset-management activities, with the products of Transtrend (Diversified Trend Program), in particular showing a negative investment result, due to financial markets turmoil. For 2011 the total gross performance fees earned group-wide amounted to EUR 14.3mn, which was EUR 80.4mn lower than in the previous year.
Assets under management
AuM at 1 Jan 2011
Net cash flow
AuM at 31 Jan 2011
The total cash inflow was over EUR 10.0bn with outflow of EUR 2.4bn in 2011, resulting in a net cash inflow of EUR 7.6bn. The net cash inflow from institutional clients was especially strong and well-diversified gaining EUR 5.4bn compared to EUR 2.2bn from retail clients. Dutch institutional clients particularly contributed to the strong inflow, both in equity and fixed income products.
The proportion of institutional assets to Robeco’s total assets under management further increased to 48% (2010: 46%).
In Europe, assets under management in 2011 were at similar levels to 2010. On the European retail business side, the outflow in money-market products and structured products (mainly a result of terminations) and some equity funds was offset by inflows into US-managed equity funds, various fixed income funds and Transtrend products. The cash inflow into mutual funds was remarkably strong despite poor market conditions caused by the credit crisis.
Robeco has further strengthened its institutional market share in the Netherlands, demonstrating good progress in the year.
The development of Robeco’s Premie Pensioen Instelling (PPI, a defined-contribution pension institution) has continued and Robeco has won significant mandates in this area, adding to assets under management in 2011 and in early 2012. The strength of Robeco’s Investment Solutions department (established in 2010) has contributed to this success. The department strives to offer pension funds and other institutional investors a full service to face the challenges of the present and the future, which include population ageing and longevity as well as inflation.
The EUR 12bn fiduciary management contract awarded to Robeco by Pensioenfonds Vervoer underlines the attractiveness of our services offered.
In the US, AUM increased slightly in 2011. Harbor Capital Advisors contributed substantial new investments from clients, with the Capital Appreciation Fund and Harbor International Fund being the main beneficiaries of the net cash inflow. Also, Robeco Investment Management (RIM) generated considerable net cash inflow with Robeco BP Large Cap Value and Robeco BP Mid Cap Value Mutual Funds contributing especially well.
Rest of the World
Robeco’s footprint includes offices in the Middle East and Asia Pacific where Robeco concentrates on institutional investors, larger distributors and intermediaries. AUM for the Rest of the World remained stable in 2011 with net cash inflow from both retail and institutional business.
Canara Robeco, Robeco’s joint venture in India, which was established in 2007, has built a reputation for reliability and as a market authority in a very short time, providing a solid foundation for long-term growth. Assets under management have shown a steady increase since 2007 and continue to grow.
Robeco had a strong year in responsible investment winning EUR 1.1bn of new engagement mandates in 2011. In total, assets under engagement (AuE) declined in the year to EUR 41.3bn from EUR 43.7bn AuE at the end of 2010. The decrease in total AuE was driven by the downturn in financial markets in the second half of 2011, as asset values decreased. Robeco has -in close cooperation with SAM- continued in its integration of ESG principles across the majority of the portfolio, including into our fixed income strategies.
New funds and awards
During 2011, Robeco introduced a selective range of new funds, which contributed to performance, including Robeco Emerging Conservative Equities, Robeco Global Conservative Equities, Robeco US Select Opportunity Equities, Robeco Asian Stars Equities, Robeco Financial Institutions Bonds and Robeco Emerging Debt.
Several Robeco investment opportunities were awarded during 2011. The Robeco Consumer Trends Equities received a Lipper-award for the outstanding performances over the last 5-years in the fund’s category as did Robeco Emerging Markets Equities over a 10-year timeframe. SAM’s Smart Energy investment strategy has been awarded ‘Best Clean Energy Fund’ at Investment Week’s Climate Change Investment Awards in London in 2011. SAM’s Sustainable Climate investment strategy also received a special commendation for ‘Best Climate Change Fund’. Lipper awarded Canara Robeco Income Fund the Best Performing Indian Rupee Bond Fund over a three-year and five-year timeframe. Robeco Asia Pacific Equities was awarded by Lipper for a 10-year timeframe.
Note: All figures in this press release are unaudited.