Defensive Equities

Winning by losing less

Key points

  1. Limiting downside risk by integrating forward-looking distress indicators

  2. Incorporating sustainability as well as return factors

  3. Aiming for higher risk-adjusted returns than the market over a full cycle

Alpha drivers

Our defensive investing strategy encompasses Conservative Equities and builds on the low-risk anomaly identified in the asset pricing literature, which demonstrates that low-risk securities tend to produce higher risk-adjusted returns than their high-risk counterparts.1 This strategy is driven by a proprietary stock-ranking process with a strong track record that combines multiple dimensions of risk for robust downside protection and includes return factors for enhanced upside potential. This approach identifies the most attractive defensive companies.

Our approach

Defensive investing is designed for steady capital growth with a focus on preserving capital, diversifying portfolios, and generating reliable dividend income. Robeco's Conservative Equities strategy is our answer to this approach2, standing out by blending backward-looking risk measures and forward-looking distress indicators3.

Additionally, the strategy integrates a broad range of return variables. As such, it targets sustainable income through the use of value and quality variables and captures positive sentiment with momentum and analyst revisions variables. This helps to increase its up-capture potential in rising markets and enhances long-term returns.

The Conservative Equities strategy selects the most attractive defensive stocks based on expected risk and return, while taking transaction costs into account and exploiting short-term alpha signals to optimize trading. In order to ensure sufficient diversification, strict concentration limits are applied at country, sector and stock level.

Unlike passive indices, client cash flows are actively used to optimize portfolios using the latest alpha signals while avoiding unnecessary portfolio turnover, reducing costs and enhancing net returns.

Pim van Vliet - Head of Conservative Equities and Chief Quant Strategist

Pim van Vliet
Head of Conservative Equities and Chief Quant Strategist

Winning by losing less: the best offense starts with a good defense

Team

The quant group consists of more than 50 quantitative researchers and portfolio managers, making it one of the largest quantitative teams in the world. We combine this breadth of quant disciplines with over 25 years’ experience of translating our quant research into innovative solutions.

Robeco’s defensive strategy is run by an experienced group of portfolio managers within an organization that is fully committed to quantitative investing. The portfolio managers collaborate strongly with and benefit from the expertise of Robeco’s researchers in managing the strategy.

The quantitative researchers are responsible for the development and enhancement of models and applications, which form the heart of our quantitative equity strategies. The experienced research team has strong academic links.

Regions

Conservative Equities is offered for the global developed and global all-country regions as well as Emerging Markets, Europe, US and China-A shares4.

View all funds

Sustainabilty

This strategy promotes, among other characteristics, environmental and/or social characteristics, which can include exclusionary screening, ESG integration, ESG risk monitoring and active ownership. It is classified as Article 8 under the EU Sustainable Finance Disclosure Regulation.


We incorporate sustainability in the investment process in multiple ways:

  • Companies with potentially harmful business practices or products are precluded from the investable universe in line with the Robeco exclusion policy.

  • The portfolio is constructed so that it has higher exposure to companies that contribute positively to the SDGs than the market.

  • The portfolio is built so that it reflects a lower ESG risk profile and environmental footprint (carbon, waste and water) compared to the market.

  • Voting and engagement duties are carried out on behalf of clients and a direct link between the enhanced engagement program and the portfolio is applied.

Robeco also offers an SDG & Climate Conservative Equities strategy. This sustainable Article 9 strategy is Paris-aligned with a 50% lower carbon footprint and has a significantly better ESG and SDG profile than the market index.

Footnotes

1 Low Volatility defies the basic finance principles of risk and reward
2 The introductory guide to Conservative Investing
3 Forecasting stock crash risk with machine learning
4 The Low Volatility effect in China

Ingredients

01

Core solution

A central investment of a long-term portfolio

02

Prudence

Keeping turnover low for long-term benefits.

03

Research-driven

A true understanding of the topic has been in our DNA since the start

04

Systematic

Taking a rules-based approach to investment management

Let's keep the conversation going

Keep track of fast-moving events in sustainable and quantitative investing, trends and credits with our newsletters.

Stay updated
Robeco

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

Important information This disclaimer applies to any documents and the verbal or written comments of any person in presentations or webinars on this website and taken together is referred to herein as the “Information”. The services to which the Information relate are NOT FOR RETAIL CLIENTS - The information contained in the Website is solely intended for professional investors, defined as investors which (1) qualify as professional clients within the meaning of the Markets in Financial Instruments Directive (MiFID), (2) have requested to be treated as professional clients within the meaning of the MiFID or (3) are authorized to receive such information under any other applicable laws and must not be relied or acted upon by any other persons. This Information does not constitute an offer to sell, or a solicitation of an offer to buy, any financial product, and may not be relied upon in connection with the purchase or sale of any financial product. You are cautioned against using this Information as the basis for making a decision to purchase any financial product. To the extent that you rely on the Information in connection with any investment decision, you do so at your own risk. The Information does not purport to be complete on any topic addressed. The Information may contain data or analysis prepared by third parties and no representation or warranty about the accuracy of such data or analysis is provided.

In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. 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. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management B.V. is authorised as a manager of UCITS and AIFs by the Netherlands Authority for the Financial Markets and subject to limited regulation in the UK by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.