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Robeco turns 90 in a fast-changing fund industry

Robeco turns 90 in a fast-changing fund industry

04-12-2019 | Insight

This 4 December, Robeco celebrates its 90th anniversary. As the company that launched Europe’s oldest mutual fund, our history is closely intertwined with the rapid development of the investment industry over the past nine decades. We take a step back and review some of the key events that have shaped our history so far.

  • Jan Sytze  Mosselaar
    Jan Sytze
    Mosselaar
    Portfolio Manager

Speed read

  • From the Great Depression to the digital age
  • Research-based approach since the beginning
  • Pioneer in EM, quant and sustainability

The Rotterdamsch Beleggings Consortium, Robeco for short, was founded in Rotterdam on 4 December 1929. The world has changed dramatically since, but some things have also remained the same. For instance, Robeco is still based in Rotterdam, offering research-driven diversified investment services to small and large investors around the world.

Robeco was introduced only five years after the first American open-end funds were founded in Boston, which marked the start of the modern mutual fund industry. As Europe’s oldest mutual fund, Robeco’s history is therefore closely intertwined with the sector’s rapid expansion over the past nine decades.

From initially being an insignificant part of financial markets in the late 1920s, the global fund industry has developed into the USD 47 trillion behemoth it is today. The story of this boom and of Robeco’s first 90 years of existence can be split into three 30-year subperiods, corresponding to the main stages of our development. 

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1929-1959 Humble beginnings

The journey starts with Robeco’s humble beginnings, between 1929 and 1959. This period was marked by the aftermath of the 1929 stock market crash and the Great Depression of the 1930s. Merely two years after its introduction, Robeco had lost than half of its initial startup capital. Early investors had to wait decades before their initial investment recovered.

The consortium grew steadily, investing in both stocks and bonds globally, even in emerging markets

Nevertheless, the consortium grew steadily, investing in both stocks and bonds globally, even in emerging markets like Peru, Chile and Argentina. At the time, the investment industry was still a sleepy corner of the financial world. Portfolio managers were conservative, slowly moving their investments, with the Great Depression still fresh in their minds.

1959-1989 The big transformation

1959 was a milestone year for Robeco, as the first listing on a stock exchange outside of the Netherlands was established, in Paris. Many international listings would follow, which, together with a 20-for-1 stock split in the same year, sparked the explosive growth that Robeco experienced in the 1960s, helped by stellar investment results.

Robeco would then grow to be a near-monopolist in the Netherlands and the largest fund house in Europe in the 1970s. Only in the 1980s did competition begin to intensify, as large retail banks started to offer their own funds to their clients. Despite that, Robeco still remained, by far, the most dominant player in the Netherlands.

In the meantime, the mutual fund industry also underwent a large transformation in the 1960s, as a result of three major developments. First, in the so-called Go-Go years, conservative managers were overruled by young, fast-talking, heavily-trading portfolio managers, who built concentrated high-risk portfolios that exhibited a high turnover. 

Second, in Chicago, a group of academics would transform finance into an academic discipline, developing models and performance measurement techniques that are still widely used. Finally, the introduction of the MSCI World Index in 1969 and the first passive strategies in the 1970s sparked the rise of indices and passive investing.

After the bear market of the 1970s, in which money market funds became very popular, the bull market of the 1980s brought large growth to the fund industry.

1989-2019: From Berlin Wall to Big Data

In November 1989, the Berlin Wall fell, heralding the new wave of globalization of the nineties. For Robeco, the 1990s marked the beginning of an intense cooperation with the Dutch Rabobank. This led to a new wave of growth for Robeco and culminated with Rabobank’s full ownership of Robeco in 2001. 

Computerization, better and faster access to large datasets and to information transformed the industry

Meanwhile, with the opening up of the East, in particular China, market forces changed drastically. And there were other crucial disruptions for the fund industry, such as the digital revolution. Computerization, better and faster access to large datasets and to information also transformed the industry.

Since 2000, also through international acquisitions, Robeco has become more and more the international asset manager it is today. Moreover, the success of Robeco’s quantitative strategies and the company’s strength in the area of sustainable investing gave Robeco two new focus areas where it now is considered to be world class.

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