Robeco, The Investments Engineers

High Conviction Equities

Strong framework with high active share

Key points

  1. Concentrated portfolio of 35 to 50 stocks and active share > 80%

  2. Unconstrained portfolio construction without benchmark restrictions

  3. Uncovering material ESG factors and quantifying this impact in the valuation

Active sustainable approaches that truly deviate from market indexes can make a difference, now more than ever. Our high-conviction strategy aims to outperform its reference indexes over a three- to five-year investment horizon. This approach results in concentrated portfolios of attractive stocks featuring a high active share, low turnover and full ESG integration.

Our approach

The strategy is rooted in our rich heritage and extensive experience with global equity investing since 1930. It allows our clients to benefit from a portfolio consisting of our very best investment ideas: only those stocks in which the investment team has the highest conviction enter the portfolio. The benchmark-agnostic and unconstrained character of our high-conviction strategy allows our portfolio managers to build portfolios comprising stocks they consider to be attractive from a fundamental, sustainability and valuation point of view.

As these portfolios are often contrarian and truly differ from market indices, it may take time for the investment case to develop in higher stock prices. It’s important, therefore, not only to have a high active share portfolio but also a long investment horizon. As an additional benefit, this results in lower portfolio turnover and hence lower transaction costs.

Team

The strategy is managed by Robeco’s Fundamental Equities group of more than 60 investment professionals located in Rotterdam, Zurich, Hong Kong and Shanghai.

Martijn Cremers - University of Notre Dame

Martijn Cremers
University of Notre Dame

“

Only those with patient investment strategies on average outperform

Sub-strategies

The high-conviction strategy can be applied to any broad investment universe. Robeco currently manages high-conviction portfolios for Global, European, Emerging and Asian equity markets.

Sustainability

Our high-conviction strategies are classified under the EU Sustainable Finance Disclosure Regulation as Article 8. The strategies promote, among other characteristics, environmental and/or social characteristics, which can include exclusionary screening, ESG integration, ESG risk monitoring and active ownership.

Our ESG integration goes well beyond simply avoiding stocks from typically polluting sectors such as fossil fuels; ESG analysis is integrated in every step in the investment process. We know that sustainability is a long-term force for change and therefore strive to integrate ESG across our investment solutions, actively engage with companies to change their practices, and work on real impact. We use sustainability factors to identify the risk and return potential in business models of companies. We focus on the most material sustainability factors that could potentially impact the value-creation capabilities of a company. Our ESG research enables us to make better-informed decisions and integrate ESG insights into our proprietary valuation model.

In addition, we apply value-based exclusion criteria based on Robeco’s exclusion policy. For the sustainable range we ensure that the portfolio’s ESG risk profile is lower than the reference index and that the environmental footprint (GHG emissions, water use and waste generation) is at least 20% better than the index.

Ingredients

01

Agnostic

Flexible and opportunity-driven instead of bound to a benchmark

02

High conviction

Concentrated portfolio to reflect our highest-conviction stocks

03

Rich heritage

This has been a core expertise for us for decades

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Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

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