Robeco logo

Important Information

Warning/Important note: This website contains information which is only available to qualified investors as defined below. If you are not a qualified investor, please click “I Disagree” to leave the website.

By clicking on "I agree", I declare that:

  • I am a qualified investor as defined under 1

  • I have read and understood the Terms and Conditions and Disclaimers as described under 2


1 - This website may only be accessed directly or indirectly by the following persons in Singapore:
1) “institutional investor” under section 304 of the Securities and Futures Act 2001 (“SFA”), which means:
(i) the Government; (ii) a statutory board as may be prescribed by regulations made under section 341 of the SFA; (iii) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is (A) to manage its own funds; (B) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or (C) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country; (iv) any entity (A) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and (B) whose funds are managed by an entity mentioned in sub-paragraph (iii); (v) a central bank in a jurisdiction other than Singapore; (vi) a central government in a country other than Singapore; (vii) an agency (of a central government in a country other than Singapore) that is incorporated or established in a country other than Singapore; (viii) a multilateral agency, international organisation or supranational agency as may be prescribed by regulations made under section 341 of the SFA; (ix) a bank that is licensed under the Banking Act 1970 (Cap.19); (x) a merchant bank that is licensed under the Banking Act 1970; (xi) a finance company that is licensed under the Finance Companies Act 1967; (xii) a company or co-operative society that is licensed under the Insurance Act 1966 to carry on insurance business in Singapore; (xiii) a company licensed under the Trust Companies Act 2005; (xiv) a holder of a capital markets services licence; (xv) an approved exchange; (xvi) a recognised market operator; (xvii) an approved clearing house; (xviii) a recognised clearing house; (xix) a licensed trade repository; (xx) a licensed foreign trade repository; (xxi) an approved holding company; (xxii) a Depository as defined in section 81SF of the SFA; (xxiii) an entity or a trust formed or incorporated in a jurisdiction other than Singapore, which is regulated for the carrying on of any financial activity in that jurisdiction by a public authority of that jurisdiction that exercises a function that corresponds to a regulatory function of the Authority under this Act, the Banking Act 1970, the Finance Companies Act 1967, the Monetary Authority of Singapore Act 1970, the Insurance Act 1966, the Trust Companies Act 2005 or such other Act as may be prescribed by regulations made under section 341 of the SFA; (xxiv) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere; (xxv) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors; (xxvi) the trustee of such trust as the Authority may prescribe, when acting in that capacity; or; (xxvii) such other person as the Authority may prescribe.


2) “relevant person” under section 305(1) of the SFA, which means:
(i) An accredited investor; (ii) a corporation the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; (iii) a trustee of a trust the sole purpose of which is to hold investments and each beneficiary of which is an individual who is an accredited investor; (iv) an officer or equivalent person of the person making the offer (such person being an entity) or a spouse, parent, brother, sister, son or daughter of that officer or equivalent person; or (v) a spouse, parent, brother, sister, son or daughter of the person making the offer (such person being an individual).

3) any person who acquires the units [in a collective investment scheme] as principal if the offer is on terms that the units may only be required at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of units in a collective investment scheme, securities, securities-based derivatives contracts or other assets, and if the following condition is satisfied: (i) the offer is not accompanied by an advertisement making an offer or calling attention to the offer or intended offer; (ii) no selling or promotional expenses are paid or incurred in connection with the offer other than those incurred for administrative or professional services, or by way of commission or fee for services rendered by any of the persons specified in section 302B(1)(d)(i) to (vi) of the SFA; and (iii) no prospectus in respect of the offer has been registered by the Authority or, where a prospectus has been registered (A) the prospectus has expired pursuant to section 299 of the SFA; or (B) the person making the offer has before making the offer (1) informed the Authority by notice in writing of its intent to make the offer in reliance on the exemption under this subsection; and (2) taken reasonable steps to inform in writing the person to whom the offer is made that the offer is made in reliance on the exemption under this subsection.

4) Or otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

If you are not any of the types of persons described above, you are not authorized to enter this website and you should leave this website immediately.

2 Terms and Conditions
You acknowledge that you have read these Terms and Conditions (“Terms”) prior to accessing the website located at www.robeco.com/sg (“Website”) and you agree to be bound by the Terms. If you do not agree to all of the Terms, you are not an authorised user and you should not use the Website. The Website is owned by Robeco Singapore Private Limited (company registration number: UEN. 201541306Z), which is licensed by the Monetary Authority of Singapore (“MAS”) pursuant to the Securities and Futures Act 2001 (“SFA”) of Singapore, and is managed by Robeco Singapore Private Limited and/or its affiliates (collectively, as “Robeco”). The Website is intended for and should be accessed by institutional investors or accredited investors (as defined under Section 4A of the SFA) of Singapore. The Website is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the Robeco to any registration or licensing requirement within such jurisdiction. It is your responsibility to observe all applicable laws, rules and regulations of any relevant jurisdiction. The content contained in the Website is owned by Robeco and/or its information providers and is protected by applicable copyrights, trademarks, service marks, and/or other intellectual property rights. You may not copy, distribute, modify, post, frame or link the Website, including any text, graphics, video, audio, software code, user interface, design or logos. You may not distribute, modify, transmit, reuse, repost, or use the content of the Website for public or commercial use, including all text, images, audio and/or video. Robeco may terminate your access to the Website for any reason, without prior notice. Neither Robeco, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from the access of the Website. You agree to indemnity and hold Robeco, its associates, directors, officers or employees harmless against any and all claims, losses, liability, costs and expenses arising from your use of the Website due to violation of the Terms. Robeco reserves the right to change, modify, add or remove any parts of the Terms at any time and for any reason. The Terms shall deemed to be effective immediately upon posting. The Terms shall be governed by, and shall be construed in accordance with, the law of Singapore.

Disclaimers
The Website has not been reviewed by the MAS. Accordingly, the Website may not be accessed directly or indirectly to persons in Singapore other than (i) to an institutional investor under Section 304 of the SFA, (ii) to a relevant person pursuant to Section 305(1), or any person pursuant to Section 305(2), and in accordance with the conditions specified in Section 305, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Nothing in the Website constitutes tax, accounting, regulatory, legal or investment advice. The Website is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation or for the purpose of soliciting any action in relation to Robeco’s businesses, or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer and solicitation. Any reproduction or distribution of information from the Website, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accessing to the Website, you agree to the foregoing.

The funds referred to in the Website are for information only. It is not a recommendation or investment advice, nor does it mean the funds is suitable for all investors. The contents of the website is not reviewed by the MAS. Any decision to participate in the funds should be made only after reviewing the sections regarding investment considerations, conflicts of interest, risk factors and the relevant Singapore selling restrictions. The Funds referred in this Website are notified with the MAS and are only available to the professional investors in Hong Kong and to qualified investors in Singapore. You should consult your professional adviser if you are in doubt about the stringent restrictions applicable to the use of the Website, regulatory status of the funds, applicable regulatory protection, associated risks and suitability of the funds to your objectives.

Any decisions made based on the information contained in the Website are the sole responsibility of yours. Any investments made or to be made shall be with your independent analyses based on your financial situation and objectives. The investments and strategies contained in the Website may not be suitable for all investors and are not guaranteed by Robeco.

Investment involves risks and may lose value. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance. The Website may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies and such projection or forecast is not indicative of the future. The information contained in the Website, including any data, projections and underlying assumptions are based upon certain assumptions, management forecasts and analysis of information available on an “as is” basis and without warranties of any kind, whether express or implied, and reflects prevailing conditions and Robeco’s views as of the date published or indicated, and maybe superseded by subsequent events or for other reasons. The information contained in the Website are accordingly subject to change at any time without notice and Robeco are under no obligation to notify you of any of these changes. Robeco expressly disclaims all liability for errors and omissions in the information presented in the Website and for the use or interpretation by others of information contained in the Website.

Robeco Singapore Private Limited holds a capital markets services licence for fund management issued by the MAS and is subject to certain clientele restrictions under such licence. An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.

I Disagree

09-03-2022 · Insight

Value could outperform for five years or more

The resurgent Value style could bring market-beating returns for the next five years and beyond as interest rates rise, Robeco’s Value experts say.

    Authors

  • Jan Sytze Mosselaar - Portfolio Manager

    Jan Sytze Mosselaar

    Portfolio Manager

  • Arnout van Rijn - Portfolio Manager

    Arnout van Rijn

    Portfolio Manager

  • Duilio Ramallo, CFA - Portfolio Manager, Boston Partners

    Duilio Ramallo, CFA

    Portfolio Manager, Boston Partners

Summary

  1. US Value trend may replicate other post-traumatic periods

  2. Asian Value stocks are trading at a ‘double bargain’ discount

  3. European Value can benefit from new investment regime

Market conditions are expected to be dominated by central banks raising interest rates and removing stimulus packages, partly to combat record levels of inflation as the world emerges from Covid. The Fed is already seen making up to five rate rises in 2022.

Such an environment is well-suited to the value investment style, which has been outperforming growth stocks since economic normality began to return with the mass vaccinations programs that began in 2021. In the January 2022 market meltdown, caused by inflation fears, value stocks considerably outperformed their growth counterparts as investors looked for safer havens.

Value investing is a style which looks for stocks whose share prices do not reflect the company’s true potential and are sometimes considered the ‘unloved gems’ of the market. It takes many different forms, but the end goal is the same: to invest in businesses that are undervalued by the market for one reason or another before they rerate to a higher level.

Reminiscent of the tech bubble

“What’s been happening lately is very reminiscent to what happened during the build-up to the tech bubble in the late 90s,” says Duilio Ramallo, Portfolio Manager of the US Premium Equities strategy at value investors Boston Partners.

“When the bubble burst in 2000, value had a significant outperformance period over the course of the next six to seven years. The value style generally tends to perform very well during traumatic periods in the market, and the market today reminds me of the post-tech bubble.”

“There was a similar pattern just after the Great Financial Crisis when value did very well, and also after the large market drawdowns during the Brexit scare. More recently, value has outperformed the market coming out of the pandemic. So, we think that value could have a decent run over the course of the next five years or more.”

Value looks attractive relative to growth across all capitalizations

Value looks attractive relative to growth across all capitalizations

Source: The Leuthold Group.
Past performance is no guarantee of future results.

“On the growth side, you still have valuations that are very elevated, both on an absolute basis and relative to history. Value indices look much more attractive on both a relative and absolute basis and significantly more attractive compared to their growth counterparts.”

Why size matters

Ramallo says it remains important to look for trends within the market, particularly for an all-cap portfolio like his that can target any size of company. Small-cap and mid-cap companies began to enjoy the value rotation first as the large-cap sector is dominated by giant tech companies that fueled the growth stock boom during Covid.

That tech-driven growth boom may now be over as people return to work and become less reliant on home technology or entertainment. “I think this could be the beginning of the end of very strong growth markets that we've witnessed over the last five years,” Ramallo says.

“Across the market capitalization spectrum, we believe value still has a long way to run. And with respect to the Fed tightening, certainly our portfolio is very well positioned for a tightening cycle given the weight of financials in it that will benefit from higher interest rates.”

Asian Value: seeking Value in a bargain region

Asian stocks are trading at a deep discount to their developed market counterparts but are now ideally placed to catch up, says Arnout van Rijn, Chief Investment Officer for Robeco’s Asia-Pacific region.

“We're now starting to see an almost inevitable pick-up of long-term interest rates,” he says. “Bond investors know that when rates are going up, you would like to own short duration. Within equities, value stocks offer that desirable short duration profile as cash flows are nearby.”

“For years, the tailwinds have been behind growth stocks because they were long duration and interest rates kept going lower. The mindset of low rates forever has changed and that sets a very different stage.”

“Asia has massively underperformed the rest of the world, particularly in 2021. Asian stocks are trading at about 1.7 times book value (at end-2021) compared to 4.9 times in the US. That gap hasn’t been as large since the tech bubble in the late 1990s, after which it started to reverse quite dramatically. Asian value stocks went on to have a very nice run of outperformance.”

The price/book multiple gap between Asia and the US is at a record high, reminiscent of the late 1990s tech bubble.

The price/book multiple gap between Asia and the US is at a record high, reminiscent of the late 1990s tech bubble.

Source: MSCI, Bloomberg, Robeco.
Past performance is no guarantee of future results.

Avoiding the value trap

Van Rijn says it remains important to avoid the ‘value trap’ – stocks that are cheap because the company actually doesn’t have a great outlook due to poor business momentum. “We call ourselves value investors with a future,” he says. “We're also looking for momentum in the stocks that we own.”

“We don't want to buy stocks that basically are being put out of business. That's the ‘value is dead’ element. Most of our portfolio stocks have cyclical upsides, or are sensitive to the rate cycle in the US, and therefore also to interest rates in Asia. Stocks such as under-appreciated banks will go up as rates go up.”

“Asia is also actually the leading region for the tech supply chain which has seen a lot of scarcities. The market is quite consolidated, so those companies have a lot of pricing power, and we really like that in our portfolio. We call these companies ‘best-in-tech’ because they are under-appreciated tech with pricing power and structural growth drivers.”

“Apart from ‘cyclical upsides’ and ‘best-in-tech’, we also see a lot of hidden gems in the ‘new energy’ segment and frontier markets in the ASEAN region, such as Indonesia and Vietnam. So, we’re finding more and more stocks that actually do have value in Asia.”

Get the latest insights

Subscribe to our newsletter for investment updates and expert analysis.

Stay updated

Europe: the opposite of Nasdaq

In Europe, value stocks have also lagged, but the tide is turning as central banks including the ECB start turning the screws, says Jan Sytze Mosselaar, Portfolio Manager in the Robeco Quantitative Equity team.

“One way of looking at European value is you could say it's the opposite of the Nasdaq,” he says. “The Nasdaq has had a fantastic run for the last seven years, while European value has basically lagged every other index. That's quite astonishing.”

“January 2022 was quite a turnaround in absolute returns, with a 10% performance difference with growth. With interest rates now rising from very low points, especially in Europe, you could basically say we are now in a new investment regime.”

The relative performance of European value stocks compared with the MSCI Europe – the tide has turned.

The relative performance of European value stocks compared with the MSCI Europe – the tide has turned.

Source: MSCI, Bloomberg, Robeco.
Past performance is no guarantee of future results.

Rising yields will help

Mosselaar says rising rates combined with the reversal of the quantitative easing money tree that fueled the growth stock rally are key to value’s fortunes.

“European value can be a very promising strategy for the years to come, especially when yields are expected to rise,” he says. “Last year, markets were mostly driven by inflation expectations going up. But in January, real yields started to creep up. We think that this rising yield environment, especially in Europe, can be a tailwind for value equities.”

“On the whole, the bull market basically passed European value investors by. Now, we think this combination of more moderate macro environments, higher yields, low valuations and earnings that have recovered means that all the traffic lights are on green for European value.”

Important information

This information is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation. The contents of this document have not been reviewed by the Monetary Authority of Singapore (“MAS”). Robeco Singapore Private Limited holds a capital markets services license for fund management issued by the MAS and is subject to certain clientele restrictions under such license. An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.