20141010 emagazine vor

In this issue

SPAIN IS RECOVERING Page 5 RISE OF RETAILER ZARA Page 7 TEAM BRUNEL & ROBECO: PIONEERS WITH A PASSION FOR DATA Page 9

SPOTLIGHT ON SPAIN A collection of articles to commemorate Robeco’s sponsorship of the Volvo Ocean Race

CONTENTS 3 Foreword 4 Spain can do it Léon Cornelissen 6 Rise of retailer Zara Jack Neele 8 Pioneers with a passion for data Bouwe Bekking & Peter Ferket 10 Spanish debt on a rising tide Olaf Penninga 13 Stress-testing boats and banks Patrick Lemmens 14 ‘We want to be stars, not look at them!’

Andrew Cape - Navigator 15 Volvo Ocean Race Facts & Figures

4-11 October

Alicante

14-15 March

Auckland

14-17 June

Lorient

15-19 November

Cape Town

18-19 April

Itajaí

19 June

The Hague (Pit Stop)

2-3 January

Abu Dhabi

16-17 May

Newport

27 June

Gothenburg

6-7 June

Lisbon

7-8 February Sanya

16 Can you beat Bouwe?

The game

FOREWORD It has taken months of planning, but the Volvo Ocean Race 2014-15 is with us at last. To commemorate the event, we plan to publish a series of e-magazines focusing on each of the eleven ports that the race will grace over the next nine months.

And so we begin in Spain – a nation that, like the ocean, has had its peaks and troughs in recent years. After surviving the tsunami of the Eurozone debt crisis, the country is now on an even keel – but will it be plain sailing for investors?

In our first edition, we focus on Spain from all investment angles. Chief economist Léon Cornelissen offers his insights into how the Spanish economy is recovering, while consumer trends equities portfolio manager Jack Neele describes a local success story: retailer Inditex and its flagship Zara clothing brand.

From the fixed income side, Olaf Penninga explains why Spain now has star billing in his

Euro Government Bonds fund. In the financials field, Patrick Lemmens offers insight into whether recapitalized Eurozone banks are now finally part of the solution rather than the problem. For Team Brunel, skipper Bouwe Bekking joins with Robeco’s head of equities Peter Ferket to relate how they both use quant data for effective risk management.

Trying to figure out which way the wind is blowing is important for both leaders. Navigator Andrew Cape explains exactly how he does it at sea, while Race Control enlightens us on how they keep track of the boat and how well it is doing against its competitors.

We hope you enjoy our first e-magazine and will join us for what is truly a voyage of discovery in the months ahead.

Roderick Munsters

Chief Executive Officer

SPAIN CAN DO IT Léon Cornelissen Spain is recovering. Robeco’s chief economist, Léon Cornelissen, analyzes the economic opportunities and risks.

“Spain is emerging from the crisis. The turnaround from recession to economic recovery started last year in August, when the Purchasing Managers’ Index, an important indicator, exceeded 50 for the first time. Since then, the index has risen still further. Everything above 50 points indicates economic recovery. In the second quarter, the Spanish economy grew by 1.2%. Spanish unemployment numbers also indicate that the recession is over, having dropped from 26.3 percent in March 2013 to currently 24.7 percent. Though still extremely high, things are moving in the right direction.”

Debt “However, the Spanish government-debt situation looks less rosy. At the end of 2013, this amounted to 93.7 percent of gross national income, placing Spain in the danger zone. If this figure exceeds ninety percent, it is difficult to stabilize the debt burden. But Spain can do it. The Spanish treasury is benefiting from both economic recovery and a sharp drop in government-bond yields. The ten-year bond yield has dropped from 7.7 percent in 2012 to 2.2 percent now. However, it is important for Spain to straighten out its budget. At the moment, the

government deficit amounts to minus 7.1 percent.

That is much too high. It is interesting to note that investors in Spanish debt paper do not appear to be taking much notice of this rising debt burden.”

Mixed bag “A lot still has to happen in Spain. The employment market is not very flexible. Too many people have been marginalized. The government must do everything in its power to ensure that these people don’t give up hope, as this would severely undermine the growth potential of the Spanish economy This same government’s decision to allow wage negotiations to take place at factory rather than sector level was a sound one. It gave employers greater negotiating powers. This initially led to a substantial net decline in wages, which has now abated somewhat. In the long term, wages will rise again – a good thing for consumer spending, which improved somewhat in the last quarter. Spanish house prices have risen again slightly for the first time. This is favorable for the construction sector.”

Former colonies “Spain’s strong ties with its former colonies in Latin America are helpful. A substantial part of the earnings generated by Spanish companies listed in the IBEX 35 can be attributed to this. If

Latin America does well, this has a positive effect on Spain. This year, for instance, the Madrid stock exchange benefited from the positive developments in the Latin American markets.

The IBEX 35 is currently 11 percent up, while the Eurostoxx 50 is only four percent higher. That’s quite a difference.”

Exports “The fact that Spanish export activity is increasing, is positive. The lower wage costs have made Spain more competitive. The depreciation of the euro has also had a positive effect. Draghi wants to weaken the euro. Spain’s exports will benefit from the general improvement in Europe’s export situation.

I expect the emerging markets to show accelerated growth again in the coming year relative to the developed markets. This, too, will further boost Spanish export growth. Spain now has a currentaccount surplus again.”

Unrest “The whole of Europe is feeling the impact of the escalating conflict in Ukraine. If the German economy stagnates due to the further deterioration of consumer and producer confidence as a result of the conflict, Spanish exports will suffer. But even if the conflict is allayed - which we expect -, we do not anticipate a normalization of relations with Russia.

The illegal annexation of the Crimea has inflicted

lasting damage. Paradoxically, Spain, as Europe’s biggest LNG importing country, could benefit from such a deterioration in European relations with Russia. Through their extensive LNG facilities, they can connect the rest of Europe to alternative gas suppliers.

The unrest in the Middle East has so far not had a negative effect on Spain. Quite the opposite: oil prices dropped rapidly in recent months, partly due to the fact that the IS offensive has been less extensive than oil speculators had anticipated.

Spain, just like some other European countries, is a net oil importer. So low oil prices are a good thing.”

Scottish contamination “Madrid clearly has a problem with Catalonia. The referendum in Catalonia planned for 9 November could be the prelude to political unrest. Catalonia is a region that is vital to Spain. The possible secession of Catalonia is a major political and economic risk that the present prime minister Rajoy should not underestimate.”

Investment opportunities “2014 has so far been a fine year for investors in Spain. Both bonds and equities have performed well. We do not expect prices to collapse any time soon. Spain remains attractive. However, bond investors should practice caution. The Spanish debt

burden will at some point become a problem again.

But not just yet. The latest monetary measures taken by ECB president Mario Draghi played into Spain’s hand. Interest rates have been lowered.

In addition, the ECB plans to buy up asset-backed securities. This could help Spanish banks wipe their bad debts from the balance sheet. Then they will at last have the money to provide small and medium-sized enterprises with sorely needed loans.

This is necessary if the employment situation is to improve.”

RISE OF RETAILER ZARA Jack Neele, Robeco Portfolio Manager The company Inditex* may not be a well-known name outside Spain, but its flagship brand Zara certainly is. It is famous for selling fashionable clothing. So what are the secrets behind its success and why does Robeco Global Consumer Trends Equities invest in it? Interview with Portfolio Manager Jack Neele.

Inditex is a Spanish clothing retailer, which operates worldwide. Besides its main brand Zara it operates stores like Pull&Bear, Massimo Dutti and Bershka.

The company is based in the coastal city of La Coruña in the northwestern province of Galicia. The founder and CEO of the company, Amancio Ortega Gaona, has a large stake in the company and has become one of the richest people in the world.

Although Spain is still struggling economically, Inditex is doing well. Zara clothing is cheaper in their home market and the pain is compensated by successful expansion abroad.

Inditex is a very Spanish company despite its growth in international operations. Lots of clothing is still manufactured in the region of Galicia. “Inditex is a specific Spanish company. That’s where their roots are. Many Spanish people are proud of it, like the Dutch are of Heineken,” says Jack Neele, portfolio manager for Robeco Global Consumer Trends Equities.

Fits in well with philosophy Inditex fits in well with the investment philosophy of Global Consumer Trends Equities, says Neele.

“We are looking for structural winners and have a preference for companies with strong consumer brands. The defensive Inditex stock provides good diversification with other more growth-oriented stocks in our portfolio.”

Inditex represents around 2% of the total portfolio, which is just outside the top ten holdings of Global Consumer Trends Equities. “The reason it doesn’t have a higher ranking in the portfolio holdings is that the stock is no longer cheap. Because of its strong track record, valuation has risen and the price-earnings ratio is in the low 20s.” He explains why the company has been so successful.

Low risk fashion mistakes The risk of making fashion mistakes by stocking clothing that customers do not want to buy is small, says Neele. “If you have only a limited number of ranges, then the impact of a fashion mistake is immense. You end up with large write-downs on unsold stock. But for Inditex, fashion risk is very low, because the stock levels of goods in transit are lower. It will just take a few days longer to sell this stock. You do not end up with a huge leftover winter range that you need to sell over the spring period.”

Having factories and suppliers close to their markets allows Inditex to react quickly to any

change in consumer buying patterns. However, labor costs are higher than in Asia. “Inditex has production facilities in Spain, Portugal, North Africa and Turkey, which are close to their end market in Europe,” he says.

Always something new The Zara brand offers many different collections each year that attract increasing numbers of people to the store, says Neele. “The consumer knows that every three weeks there will be something new to discover in the Zara store.” This short cycle is due to the extremely short lead times for design, production and distribution, a concept sometimes referred to as ‘fast fashion’.

In contrast, competitors basically have one collection each season, he adds. “For example, it is difficult for H&M (Hennes and Mauritz) to have more than one collection, because their lead time for distribution is much longer. The reason is that H&M procures mainly in faraway Asia. This is a cheaper part of the world in which to produce, but shipping time to the market in Europe is far longer.” * This publication is intended to provide investors with general information on Robeco’s specific capabilities, but does not constitute a recommendation or an advice to buy or sell certain securities or investment products.

Many Spanish people are proud of Inditex, like the Dutch are of Heineken Jack Neele Robeco Portfolio Manager Global Consumer Trends Equities

PIONEERS WITH A PASSION FOR DATA Bouwe Bekking-Skipper, Peter Ferket-Head of Equity There are many such parallels between sailing around the world and successful investing. Both combine technical know-how with careful risk management. And both require teamwork to win over the long term.

That is why our sponsorship of Team Brunel is a natural fit with Robeco’s way of working.

A pioneering spirit has long been embedded in Robeco’s DNA. We were the first to take sustainability investing seriously, among the first to

Data is a crucial part of our campaign. If we don’t have the right numbers, we’re going to make wrong decisions.

Bouwe Bekking Team Brunel Skipper

invest in emerging markets and one of the original users of quantitative investing models.

but at the same time risk management is key to avoiding the bad parts of the market.”

Quant on the high seas

“Our quantitative investment approach is deeply embedded throughout the organization to support this. It is directly connected to the use of as much data and information as possible. But we don’t just look at a company’s past results; we regularly meet with management and look at companies’ qualitative information in order to blend insights that are both forward and backward looking.”

Quant expertise is also being used by Team Brunel to help with data collection and navigation, and to minimize risks. “We use quantitative analysis by collecting facts just like Robeco does before considering an investment,” says Bouwe Bekking, skipper of the Team Brunel boat. “We try to get as many facts and numbers as possible. We have to sail through 360 degrees and have to cover all the possible angles for every wind direction, each one requiring different sails.”

“There are so many angles involved when sailing over the ocean – the wind, the weather, the size of waves – that we use as many combinations of data as possible to match it to the real conditions of the day. We put it all in the model and then implement this information to predict velocities in all sailing conditions. The more combinations we can check out to see how fast the boat will go, the better.”

“Obviously the faster you go at sea, the more you need proper risk management, or the chance of you hitting an iceberg or a whale becomes very large. It’s the same with investing,” says Peter Ferket, head of equity investments. “We want to take active risks, and we look for opportunities,

“We also use non-financial information in our assessment of a company to decide whether or not it is an attractive investment. Something that might look like a great opportunity on the surface needs a deeper look to avoid disappointments.”

“And we also consider environmental, social and governance (ESG) factors and quantitative analysis as risk indicators. So if a stock gets in the portfolio but drops in the ESG or quant rankings, then this is a signal for us to take a deeper look at the company.”

Coping with data in all conditions Using quantitative and other research for risk management relies on accurate data, particularly in new terrain. This presents challenges for sailors and investors alike.

“Using data works well to sail from Alicante to Cape Town for example, but the real problem is in places like China where the data and charts are really bad,” Bekking says. “So we have to make risk calculations. For example, the draft of the boat is five metres, so we need to know how deep the water is and make calculations so that the keel is always higher.”

“The bigger problem is the weather. In the northern hemisphere the weather forecasts are really accurate and you can even plan on how the wind will change on an hour-by-hour basis. But once you get into the southern hemisphere, sailing for example from Abu Dhabi to China, models for weather forecasting are much less developed and can be completely wrong.”

“You then have to start making assessments; positioning yourself in relation to the competition but without being able to trust all the information.

We have to decide: do we split from the others, and put all our eggs in one basket, or follow suit and take no risk in terms of positioning?”

It’s a marathon, not a sprint Both Robeco and Team Brunel know that taking short cuts can be tempting, particularly if the circumstances are rough. But the Volvo Ocean Race is a marathon, not a sprint, and it is important to

keep a steady hand on the tiller. This applies both at sea and in the office.

“A short cut can save you time, but you need to be aware of the risks this can entail,” Ferket says.

“Typically we aim to achieve good performance in all conditions; we don’t want to be the best when markets are rallying and then the worst when they fall. We want to be the best over a long period and also do well when markets are in decline.”

“It is similar to winning the Volvo Ocean Race. It’s no good winning one leg, and then performing poorly in the next one, or not even reaching the finish line. Our goal is to deliver added value over a three to five-year horizon, which consists of many different legs in different market conditions. Being the best this year and the worst next year doesn’t work for us.”

Risk management as a life saver And while investing can be painful at times, for Bekking careful risk management can be a matter of life or death.

“My worst nightmare is losing a crew member in a rough sea,” he says. “A boat is replaceable but a person is not. There’s not much risk of hitting something – I’ve only ever seen one whale, the first time I went round the world in 1985, but there are

icebergs in the Southern Ocean, and so safeguards are in place. We just keep north of the dangerous areas; our boats now go at 30 knots and hitting something would be like driving your car into a wall at 70kph. We’d be pretty smashed up.”

“We have tried to find the limits of this particular boat, as it’s a new design and all the safety margins have been set way higher than for the last one.

And we’ve tested the crew, of course, to see how the new guys cope. Once we start racing, we will push even harder, and so any problems found beforehand will help us. We’re really looking forward to the race.”

Typically we aim to perform in all conditions Peter Ferket Head of Equity - Robeco

SPANISH DEBT ON A RISING TIDE Olaf Penninga, Robeco Portfolio Manager Fixed Income

“Spain has been one of the best performers this year,” says Penninga. “Spanish debt has

Year to date total return main fixed income asset classes (index returns) 15% 12.7%

11.7%

10% 6.3%

5.2%

5.0%

3.3% 2.5%

0%

6.4%

5.7%

5%

Germany Treasury

Source: Robeco

US Treasury

2.4%

1.9%

US Tips

JP Treasury

UK Treasury

Spain Treasury

Italy Treasury

Euro Credit US Global EMD Corp Corporate Corporate HY in USD

102 100 98 96 94 92

Germany

France

Italy

Spain

mrt.-14

90 mrt.-13

Spain’s rehabilitation can be seen in both its credit rating, and its ability to issue new bonds. “The rating agencies have been acknowledging the improvements in Spain with upgrades – it now has a BBB credit rating which is two notches inside investment grade,” says Penninga. “At one time Spain was on the brink of high yield, and with a negative outlook. But it now has received a number of upgrades, so clearly the tide has turned.”

“Spain recently issued a 50-year bond at a rate just below 4%, and the success of the sale does show that people are willing to invest in Spanish debt, even on longer maturities,” he says. “We are overweight in the 5-10-year bonds because these shorter-dated bonds benefit most directly from the ECB’s measures. Ten-year bonds benefit less directly, but their yields are a bit higher. In the end, I think investors will move out from the shorter-dated to the longer-dated bonds as they yield more.”

Penninga acknowledges that some problems remain: “Spain still has a large public and private debt pile; they need to maintain economic growth to be able to service it. They also need to reduce

mrt.-12

“Spain is a ship on the right course at the moment,” says Penninga. “It has implemented some reforms in the labor market, pensions and banking; they haven’t solved all their macro problems, but we do see these reforms beginning to work.”

104

mrt.-11

On the right course

Real GDP (100 = Q1 2008)

mrt.-10

At the peak of the crisis, Spanish debt was on the verge of junk status and was avoided by portfolio managers along with other periphery bonds.

Now Penninga’s Euro Government Bonds fund is overweight selected Spanish debt and he is positive about the country’s prospects.

Spanish bonds now account for 16% of his portfolio and one of the largest single country contributors.

Penninga is overweight on 10-year bonds as they are offering attractive returns for investors, yielding over 2%, or more than double what German government bonds yield.

“Growth is picking up, competitiveness has improved, and the labor market is getting better.

The Spanish economy is growing again while the Italian economy is still stagnating. It’s now easier for the Spanish economy to create jobs and that is being rewarded.”

mrt.-09

outperformed not only German bunds but also high yield and emerging debt.”

mrt.-08

Spain has fought its own race against time in recent years after the country was badly hit by the Eurozone debt crisis and a serious recession.

Its progress in emerging financially stronger can be seen in how its government bonds are now viewed, says portfolio manager Olaf Penninga.

Eurozone

Source: Bloomberg

unemployment; they’ve started out on the right course and global growth has to assist them. Spain isn’t fundamentally out of the woods yet, and it will take time.”

Positive on the periphery The Spanish turnaround is also true of other periphery countries which once struggled to raise new money on bond markets as their yields approached double figures, says Penninga.

“In fact we’re positive on all periphery bonds and that’s mainly because of the ECB,” he says. Its actions have been very supportive for markets directly and indirectly; by keeping yields low, the

ECB is buying time for those countries to sort out their debt problems.”

“The September ECB rate cut fits in the bigger picture that growth will remain sluggish and inflation low, and so the ECB has to help out. All stimulus is of course supportive for the weaker economies.”

This publication is intended to provide investors with general information on Robeco’s specific capabilities, but does not constitute a recommendation or an advice to buy or sell certain securities or investment products.

Spain is a ship on the right course at the moment Olaf Penninga Robeco Portfolio Manager Fixed Income

WE WON’T LAUNCH WHAT WE CAN’T PROVE

STRESS-TESTING BOATS AND BANKS Patrick Lemmens Just like boats need to be stress-tested before they enter the Volvo Ocean Race, European banks have to be stress-tested before the ECB takes responsibility for their supervision. As we are nearing the announcement of the results of this Asset Quality Review (AQR), investors are warming up to financials in general and European banks in particular.

A quick recap As the Great Financial Crisis of 2008 wreaked havoc in the western banking system, many banks’ balance sheets turned out to be unstable at best.

Whereas credit growth had been soaring, the risks had not been assessed sufficiently.

Although in the US the problems were tackled decisively, Europe kept muddling through. Stress tests were done, but banks which had passed with flying colors threatened to go bankrupt only several months later. As a result, Europe was hit by crises in, especially, Greece, Cyprus, Portugal and other countries in the European ‘periphery’.

Banking union Eventually, ECB president Draghi launched the plan of a European banking union to restore confidence in the European banking system. However, before the ECB takes over the supervision of Europe’s large banks (representing over 90% of the EU banking sector), local central banks need to perform Asset

Quality Reviews (AQR) and stress tests to safeguard the solidity of the banking system. In order to assess 131 banks, the ECB has taken ten months and employed the services of 1600 auditors. The outcome will be announced on November 3.

Spanish banks to be able to earn good returns once these provisions can decline. The same goes for Greece. Some of these peripheral banks may even be more attractive than banks in the ‘safe’ countries such as the Netherlands and Germany, whose economic growth is decelerating.

No surprises Although the results are confidential, much has become clear already. Over the past year, banks have been adjusting risk weightings, taking losses and raising capital where necessary. As such, AQR has already proven to be a very effective tool. Most of the possible shortfalls in banks’ capital positions that the AQR will reveal, will probably already have been repaired by the time the results are announced. At most, a couple of non-listed banks will have to take some action.

Spain: declining provisions will boost profitability Special attention will go to the peripheral banks.

Countries like Spain, Italy and Greece have been taking decisive measures over the past two years. In Spain, consultants have scrutinized the loan books of most banks. Based on their results, royal decrees were issued forcing banks to take provisions. Banks have been fully or partly recapitalized, balance sheets restructured and losses written off. Problem loans have peaked and the banking climate has improved. Margins were already sound, but were depressed by the huge provisions. We expect

As problems are acknowledged and solved, we expect confidence to be restored, and investors to be increasingly interested in European banks.

However, as a lot of these positive expectations have already been discounted in share prices, careful stock selection is important.

As AQR restores confidence, investors are warming up to European banks Patrick Lemmens Robeco Portfolio Manager Robeco New World Financial Equities

Short- and long-term benefits for a financials portfolio In the Robeco New World Financials Equities portfolio, we invest in long-term trends, such as Aging Finance, Digital Finance and Emerging Finance. This means that in the portfolio construction AQR does not play a role per se. The portfolio is underweight banks. However, we did buy some banks which we had sold before and whose valuation had fallen considerably. For these banks, i.e. BBVA, UniCredit and National Bank of Greece, we see both short-term upside potential once the AQR results are released and long-term growth potential. By investing in these banks we have significant and high-quality exposure to peripheral Europe.

Important information This publication is intended for professional investors. It is intended to provide investors with general information on Robeco’s specific capabilities, but does not constitute a recommendation or an advice to buy or sell certain securities or investment products.

Robeco Institutional Asset Management B.V. (trade register number: 24123167) has a license as manager of UCITS and AIFs from the Netherlands Authority for the Financial Markets in Amsterdam. The prospectus and the Key Investor Information Document for the Robeco Funds can all be obtained free of charge at www.robeco.com.

‘WE WANT TO BE STARS, NOT LOOK AT THEM!’ Andrew Cape - Navigator In the old days of sailing, the navigators who discovered new worlds gazed up at the stars to plot their course. For Team Brunel’s navigator Andrew Cape, it’s a state-of-the-art computer packed with the latest possible data.

“Everything we use is quantitative data,” says Andrew, a veteran sailor who is responsible for getting the boat safely between race legs in the fastest possible time. “There are two types of data.

We have internal information from the boat such as instruments, the GPS and the sensors, which help us to make the boat better and faster. And then we have external data which is primarily information about the weather.

“We combine all this information to use for planning, looking forward and decision making.

Everything we do now uses modern technology. I have been doing this now for 20 years and I have certainly never looked to the stars!”

For navigation, Cape has an array of gadgets from a simple compass to a computer that can calculate thousands of permutations of wind speed and direction. His “office” is a small section within the back of the boat with screens, flashing lights and data banks that look like he’s flying a space shuttle, rather than one of the simplest forms of traveling.

For both Cape and Robeco, which is a major sponsor of Team Brunel, getting access to the right data is key, particularly when information is sparse or unreliable. Robeco uses proprietary quant modeling for investment decisions, and it’s not much different on a racing boat.

Getting access to the right data is key, particularly when information is sparse or unreliable. “This is exactly the game we’re we in,” says Cape. “I would not say that the data sources are untrustworthy, but often you can have more confidence in the nearterm forecasts than those stretching out for a much longer period of time.”

“The long-term forecasts are not always so reliable.

So we must evaluate the data that we received and rely on our sources. We always have enough information; we just need to assign a level of happiness to each one, and then base our decisions on that.”

While the data is invaluable, sometimes the sailors use gut instinct to make a call, particularly if the forecasts don’t match local wind or sea conditions.

“You’re always thinking on your feet, combing data with what your own eyes are telling you,” says Cape. “You must evaluate all the time – things don’t always happen in the way that you want, and the plan can change quickly.”

“You always must think ahead. If the plan is not working, then we use everything at our disposal to make another plan work. It’s a combination of computers and gut instinct. If things are not looking right you must always go with your gut feeling at the end of the day. That sometimes happens three or four times during a leg. You have to go what you think is right – and then hope for the best!”

Mission Control The principles of sailing may be as old as time, but the technology used to control Team Brunel’s performance and safety at sea resembles Mission Control at NASA.

“Alicante is a big black box,” says Jordi Neves, Technology Director at the Volvo Ocean Race.

“On one side we have the boat which has a lot of electronics and sensors housed in a little data center. All that is part of a very complex network which also controls our cameras and microphones.

Everything is connected.”

The boat uses proprietary Cobham technology linked to the Inmarsat satellite system that routes through three land stations, including one in the Netherlands. This is not only essentially for daily communications and positioning, but to make sure the boat doesn’t hit anything, from other boats to icebergs.

Race Control in Alicante uses state-of-the-art technology – including a unique data and satellite tracking system – to make sure the boat stays ahead of the game. Like Robeco, which is a major sponsor of Team Brunel, it has developed a proprietary system to optimize the use of data from multiple sources.

“Our system is actually unique,” says Neves.

“The boats have VHF radio and an automatic identification system so that the navigator knows who is around. There are a lot of safety systems on board such a crash button that alerts Race Control: this is vital in busy shipping lanes.”

The land-based technology is directly connected to the super-advanced system on the boat, allowing guidance to be given 24/7. And while the name of the game is winning the Volvo Ocean Race, the dangers of battling the wind and waves at sea means safety is paramount.

“We have also a broadband system. The boats have no access to the internet but can access a private network from Inmarsat. All the terminals from Cobham are linked to Inmarsat. So the only way for the boat to communicate to the shore is by the Inmarsat network via Race Control.”

VOLVO OCEAN RACE Facts & Figures The system is specifically designed to take account of conditions at sea and the simple fact that the boat is constantly moving, rendering any static equipment pointless.

“We have put a significant amount of equipment into dealing with extreme conditions,” says Neves.

“The antennas suffer a lot at sea. Because the boat is always lurching one way or another, with big sails and waves constantly blocking the signal from the satellite terminals, it was a big challenge for Cobham to make stabilized terminals that are always pointing in the direction of the satellite.”

“Basically it is a dish on a platform. A disc is fine at home - you put it on the roof and it works. But the boat is moving all the time and there are a lot of vibrations. Our platform uses a lot of small engines which helps the platform to be stable, so the dish always points in the right direction.”

“But let’s not forget that the main purpose of Race Control is safety. We are always proactive. We continuously monitor the routing, weather and telemetry. Every ten seconds we transmit a pulse so that we can build a model into which we put in the weather data. In this way we can always alert the fleet in case of bad weather.”

– This is the 12th edition of the race, and the 5th under the name Volvo Ocean Race – The Netherlands and Sweden (Volvo’s home country) have the strongest history in the race in terms of the number of teams and sailors taking part – 7 teams are in this edition, including the first women’s team (Sweden) in over a decade.

– Each boat has 8 sailing crew and one on-board reporter – Some 22,000 corporate guests will be invited at stopovers and other hospitality events by sponsors of the race and the teams – The total TV audience is expected to be 1.65 billion people, on a par with the Olympics and World Cup The teams in the race are: – The Netherlands: Team Brunel – Abu Dhabi: Abu Dhabi Ocean Racing – China: Dongfeng Race Team – Sweden: Team SCA (all-female) – America/Turkey: Team Alvimedica – Spain: Team Espana – Denmark: Team Vestas Wind The other sponsors of Team Brunel are: – Brunel: project management, staff secondment and consultancy – Schouten Global: training and development – Moduleo IVC: premium vinyl flooring – Sub-sponsors : Gaastra (teamwear); Ernst & Young (accountancy)

CAN YOU BEAT BOUWE? Play our online game Here’s your chance to join the excitement of the Volvo Ocean race while keeping your feet firmly on dry land. Use our interactive game to try to predict the winners as the yachts race across the oceans until they reach the finishing line next June.

Users can make predictions and will be granted points when they get it right. Guessing the correct position of a boat during the race will acquire more points each day. At the end of the race leg a user can choose to “cash” in his or her points, or add them to their total score.

Cashing in the points while in the middle of a leg will incur a small penalty, and will reset the counter for points that can be earned in future days. That way it will be much more profitable to stick with your first prediction if it turns out to be the actual race result of the leg.

There are some fabulous prizes to be won – so have a go to see if you can beat Team Brunel’s veteran skipper Bouwe Bekking on his and your journey around the world.

About Robeco Robeco is the only asset manager to sponsor Team Brunel, the Dutch entry in the Volvo Ocean Race 2014-15. There are plenty of parallels between successful sailing and investing - both the market and ocean and constantly changing, and the

investment climate is often as unreliable as the weather at sea.

So we take a long-term view on all investments to get our clients over the finishing line with more money than they started with. Being consistent and holding your nerve during the long haul round the world can pay off handsomely in the end. Of course, this means relying heavily on teamwork and the right tools to succeed.

It also means you need to manage risks: short cuts don’t necessarily save you time: we know from investing that the squalls that hit markets eventually clear; sometimes it is better to sail through them. Both Robeco and Team Brunel use pioneering quantitative analysis to reduce risks without sacrificing performance.

Our new Volvo Ocean Race game also has lessons for investors. Over the nine months of the race, careful risk analysis will be needed – along with an eye on what the competitors are doing. And while you can cash in your points during the race, remember that switching can cost you in the long run. We often advise investors to stay on a precharted course rather than switch between funds or strategies in the short term, as it can prove more costly in the longer run.

But see how you get on – can you beat one of the most experienced sailors in the world? Good luck!

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Headquarters Robeco Group N.V. Coolsingel 120 3011 AG Rotterdam The Netherlands T +31 10 224 1224 F +31 10 411 5288 I www.robeco.com

Important information This publication is intended for professional investors. Robeco Institutional Asset Management B.V. (trade register number: 24123167) has a license as manager of UCITS and AIFs from the Netherlands Authority for the Financial Markets in Amsterdam. This document is intended to provide general information on Robeco¹s specific capabilities, but does not constitute a recommendation or an advice to buy or sell certain securities or investment products.

The prospectus and the Key Investor Information Document for the Robeco Funds can all be obtained free of charge at www.robeco.com.