Equity outlook: Equities in a new world order

Important information

The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).

This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor. Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States.

This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.

We have never seen such an action-packed start to a new US administration period. Foreign, internal and trade policy is being overhauled with a decisive wave of executive orders, taking markets repeatedly by surprise. Domestically, businessman Trump looks at public finances like a company. With too many liabilities, the balance sheet does not add up. The government’s P&L is not healthy, with too many expenses and not enough revenues. As President, Trump intends to fix this, which in itself is not a bad idea. The chosen instruments, however, we believe are highly questionable from an economic point of view. Tariffs risk being inflationary, detrimental to growth and painful for the purchasing power of the less privileged. Snubbing long-time allies and not upholding trade agreements might impact market sentiment in a costly way, resulting in less capital flows.

The incredible intensity of policy measures is currently driving a sharp pivot in global stock allocations, away from the US and toward Europe and emerging markets. To us, this represents a rebalancing, and a nascent correction of the large valuation premium the US has established in the past decade. The sizable spending plans by European governments make the region suddenly more attractive. Policy responses in China should benefit that market as well, as described with a tennis analogy in Wim-Hein Pals’ emerging markets outlook piece. We have shifted the portfolios accordingly and remain agile enough to take opportunities when they come as conditions are changing quickly.

In this time of rapid change, we must also be mindful of staying invested in future economic drivers. Trip notes (page 10) from our global portfolio manager Yanxin Liu’s recent visit to San Francisco remind us that the engine of innovation in Silicon Valley is still running fast, and Nvidia’s recently revealed USD 500 billion capital investment plan confirms that. The productivity acceleration we anticipate from technology application across the global economy is still to manifest, and that will drive real economic and investment returns. There is little chance though that markets will go up in a straight line this year.

Read the full Outlook