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A sound corporate risk oversight is relevant for the investment process in various ways. As risk taking can lead to both profits and losses, it’s important for investors to gain insight in the specific risks that are relevant for companies and the type of policies they use to mitigate those risks. The board of directors is responsible for determining the company’s risk appetite and overseeing that management has taken adequate risk management policies and procedures.
One of the biggest challenges facing fixed income investors today is how to achieve attractive returns in a dysfunctional market environment. In such a climate, global, unconstrained credit strategies can prove their worth, as they have the freedom to pursue opportunities throughout global credit markets, without being limited by traditional benchmarks.
One of the explanations for the low-volatility anomaly is that stocks with lottery-like characteristics (a small chance of experiencing a large positive payoff) are overpriced. This paper finds a similar result for stock options. The authors find that the degree of lottery-like features can explain differences in expected option returns between 10% and 50% per week.
The EU is pro-actively developing Europe-wide pension solutions with a view to supporting multinational companies, pension providers and individual citizens. New EU rules will make setting up and running cross-border occupational pensions funds (IORP) an even more realistic option. The proposed Personal European Pension Plan (PEPP) is an easy and cheap solution for individuals wishing to save.
The UN has released the Sustainable Development Goals, asking the private sector to contribute as well. Asset managers such as Robeco cannot only make an important contribution, they can also benefit from the investment opportunities that arise.
Fundamentals have deteriorated and credit valuations are not very appealing either. But that does not matter anymore. There is only one trade and that is the Central Bank. Although we would rather be underweight risk, this very strong technical support keeps us neutrally positioned.
Value investing has been researched extensively in equity markets and has recently been shown to exist in credit markets as well. In our fundamental Global Credits strategy, the Value factor also plays an important role. Here we look for cheap stocks with strong mean reversion potential.
Every year Robeco takes a fresh look at the outlook for the global economy over the next five years. Our analysis gives a prognosis for the major asset classes and three potential scenarios (baseline, stagnation and high growth).
A recent study suggests that sector investing does as well or even better than factor investing in a long-only context. We challenge this conclusion and show that an explicit allocation to well established factors yields better results than allocation to sectors.
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.
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.
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.
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.
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.