Low volatility investing

Proven downside protection with a stable source of income

Conservative equities is our active approach to low volatility investing. It is based on the anomaly that low-risk stocks tend to deliver a higher risk-adjusted return than high-risk stocks, contrary to classical finance theories. An approach that leads to a portfolio that offers stable equity returns and tend to generate high dividends.

Guide to low volatility

Global strategy since
2006

Proven track record
Risk-adjusted outperformance
3.78%

As of January 2020*
Assets
€ 23 bn

As of January 2020

* The risk-adjusted outperformance is defined as Jensen’s alpha against the MSCI World Index (net return), based on monthly investment returns in EUR, gross of fees, for Robeco QI Institutional Global Developed Conservative Equities as a representative of the strategy. In reality, management fees and transaction and other costs are charged. These have a negative effect on the returns shown. The value of your investments may fluctuate. Results obtained in the past are no guarantee for the future.

Our low volatility strategies

The risk-return paradox of low volatility investing

In recent years, low volatility has become a new investment style offering lower risk, without reducing return. It is this risk-return paradox that still shakes the fundaments of financial theory. In doing so, investors profit from the paradox. That’s good, but we believe there’s a better way.

Stable equity returns tend to come with high income

We think it is unwise to select stocks purely based on risk considerations, ignoring the price you pay for them. This is why we also consider valuation and momentum factors to enhance returns. This approach leads to a portfolio that offers stable equity returns and tends to generate high dividends.

Dividends are a significant and stable source of equity returns
Dividend yield is one of the most defensive measures of value
High dividends help enhance long-term returns and limit drawdowns

The average return series are based on the gross asset values of Robeco QI Institutional Global Developed Conservative Equities since inception (October 2006) until December 2019, gross of fees, based in EUR.

In reality, management fees and other costs are charged. These have a negative effect on the returns shown. The fund and its reference indices have been hedged for currency risk since 30 June 2012. The value of your investments may fluctuate. Results obtained in the past are guarantee for the future.

Winning by losing less in down markets

Better capital preservation can be achieved due to a significant reduction of losses during down markets. In a very bullish environment, the strategy could lag the overall market, while still delivering solid absolute returns. Once the market recovers, low volatility stocks have to make up less lost ground.

How to apply the Conservative strategy in a portfolio

Risk reduction
A pension fund with a low funding level after the financial crisis replaced conventional equities with Conservative equities to reduce risk while not giving up equity returns.

Income generator
A bank decided to include Conservative equities in its defensive income model portfolio, as the strategy combines high dividend yield with lower downside risk.

Diversification
A family office added the Conservative equity strategy to its portfolio of higher risk equity funds, in order to stabilize the overall performance.

Sustainability integration
An environmentally aware pension fund wanted to limit the ecological footprint, increase the ESG profile and reduce risk and therefore invested in the Conservative sustainable equity strategy.

Proven track record

For over ten years, we have been offering a distinctive approach to low-volatility investing, based on award-winning research.

First multi-factor models developed in 1994
First Conservative equity strategy launched in 2006
A wide range of strategies: global developed, European, emerging, all countries, US and sustainable

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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.

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