Performance Insights 2014

2014

2014

Performance Insights Important information This Performance Insights 2014 has been prepared and presented by Robeco Groep N.V., which is incorporated in the Netherlands. It is solely intended to supply the reader with general information about the investment-management activities and assets under management of Robeco Groep N.V. and its subsidiaries worldwide. It does not constitute an offer to sell or solicitation of an offer to buy any investment product or program offered by Robeco Groep N.V. or any of its subsidiaries, and is not intended to be used as the basis for an investment decision.

Robeco Groep N.V. provides investment-advisory services, including investment advice on investment products and programs, through its authorized local subsidiaries. All investment-adviser subsidiaries and affiliates are registered with their respective local regulators.

Robeco Institutional Asset Management B.V. 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

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Performance Insights

Contents Interview

Full speed ahead

CEO Roderick Munsters reflects on 2014 and looks ahead to 2015.

Ocean racing and investing share some striking features. Hence Robeco’s sponsoring of the Volvo Ocean Race.

P. 6

Introductory note

Financials P. 30

P. 4

246

250 205 200

150

189 150

150

2010

2011

100

50

0

Acceleration of growth around the globe

Robeco is strengthening its position in Europe with a new office in London. Meanwhile, there is a lot of work to do to gain a foothold in Japan. Kikuo Kuroiwa, ‘helmsman’ in Japan, and Hester Borrie talk about growth around the globe.

2012

2013

2014

P. 18

“Investment in renewable energy and resource efficiency is key” Leni Boeren, Chief Operating Officer at Robeco, comments on the innovative launch of Asia Climate Partners in November 2014.

P. 8

The information contained in this document is intended for professional investors

A big step forward P. 28

P. 22

The theory of the three circles

P. 34

2014

Interview Alan Rubenstein: “The people of Robeco should be proud of what they have achieved” P. 14

Significant increases in revenue and doubling of the AuM

A strong home market base is vital for international expansion

P. 12

P. 11

Our most innovative achievements P. 20 & 25

Star performers in Europe Kommer van Trigt on bond performance

P. 16

“One of the lessons of continued volatility is that it all boils down to robust portfolio construction with sufficient diversification” Hans Rademaker, Chief Investment Officer and member of the Management Board, reviews 2014, a year of turbulence and turmoil for markets and investors worldwide.

P. 26

Active choices in investment portfolio

David Van Hooser, chairman and president of Harbor Capital Advisors, quotes Dickens when asked to comment on 2014: “It was the best of times, it was the worst of times” P. 21

In 2014 Robeco went live with its Factor Investing Solutions: tailored solutions based on multiple factors. Head of Factor Investing Joop Huij has identified a strong demand for this evidence-based approach to investing.

P. 32

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Performance Insights

Introductory note 2014 was a year of records for Robeco. In the year in which we celebrated our 85th anniversary, our total assets under management increased by EUR 40.8 billion, resulting in an all-time high of EUR 246 billion at year end. Net cash flow amounted to EUR 6.2 billion and we realized an all-time high net profit of EUR 228 million.

2014

We hope the strong results will inspire all of us

2014 was also a year of solid returns

from all parts of our organization

We are well aware that Robeco’s

for our clients. Bonds performed

we have since been working on its

success very much depends on having

unexpectedly strongly due to

implementation. It further builds

employees who are truly engaged

continued declines in interest rates,

on the strong foundations laid in

and also empowered to use their full

and the strengthening of the US dollar

previous years and focuses on growth

potential, working together to obtain

against the euro generated positive

in the US, Europe and Asia in the

the best possible results for our clients.

returns for our equity strategies.

years to come. To mark this exciting

We hope the strong results in 2014 will

Offering attractive investment returns

next stage, we chose to sponsor

inspire all of us to continue delivering

is fundamental to our business and

Team Brunel in the Volvo Ocean

good results for our clients, our

formed the foundation for our solid

Race 2014-15. This sponsorship fits

shareholders and for Robeco itself.

results in 2014.

perfectly with the round-the-world pioneering spirit that has long been

In early March 2014 we announced

embedded in Robeco’s DNA. It also

Roderick Munsters,

our strategy for the 2014-2018

enables us to develop our rapport

Leni Boeren, Hester Borrie, Hans

period. Together with colleagues

with clients all over the world.

Rademaker and Jurgen Stegmann

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Performance Insights

Roderick Munsters reflects on 2014 and looks ahead to the year to come Roderick Munsters, CEO Robeco

2014 was a very good year for our clients, as most of our investment products did very well, with attractive single-digit and many double-digit returns. Our clients are satisfied, so I can look back on the year with satisfaction.

2014

Active managers can make a difference now The best performer in 2014 was our

the euro, generating attractive

market and we believe that active

strategies, using state-of-the-art risk

Institutional Liability Driven Euro

returns across all our equity funds.

managers can make a difference now.

and return models, in-house research

Government Bond 40 Fund, which

Equities remain our favourite asset

enjoyed a return of 85%1. This fund

class, as we believe earnings growth

However, investors should always

staff, make us well placed to move

was established for institutional

will steadily improve as economies

diversify their portfolios, take a long-

forward in 2015.

investors such as pension funds, so

recover, although of course at

term view and not put all their eggs

that they can hedge their interest rate

differing rates across the world.

in one basket. They should make

We have often led the field in

sure that they spread investments

quant and will continue to develop

risk for a 40-year period. This outsized

and backed by the expertise of our

return shows how strong long-dated

There has been strong demand for

over time and add holdings that

our range, which includes some

interest rates have again fallen in

our capabilities, and if you add the

give exposure to parts of the real

exclusive products. And it remains our

2014, and with this the long-dated

effects of the stronger dollar, rising

economy.

conviction that focus on sustainability

liabilities of many of our pension fund

markets and inflows together, our

clients.

asset base grew considerably to

As for the ‘Accelerating Growth’

risk-return profiles for our clients.

EUR 246 billion by the end of 2014.

strategy of Robeco, there will be

Sustainable companies produce

Perhaps the surprise performer was

We have also exercised tight financial

plenty of opportunities in the field

better results, achieve higher client

Robeco Property Equities, which

control, as a consequence of which

of pensions, where we see a clear

recognition and can better identify

returned 28.4% , as its listed real

our financials were also attractive.

shift from defined benefit to defined

risks and opportunities.

estate portfolio did particularly well.

Most importantly, our clients are

contribution schemes. This is a major

What we really didn’t expect was for

satisfied, and that ultimately is what

opportunity for us. Our wide range of

However, we know that we may very

interest rates to fall even further in

managing their assets is all about.

investment capabilities and services

well encounter more upsets that are

1

the Eurozone, and so government

contributes to achieving excellent

– from equities to fixed income,

likely to unsettle the markets. The

bonds in Europe achieved 10-15%

Finding value in 2015

real estate and bespoke funds and

Paris attacks were a shock and have

returns, at a time when many people

For 2015 our return expectations

solutions – makes us ideally placed to

made people more worried about

believed the bull run in bonds was

are a little more subdued: we’ve

offer the kind of diversity that clients

geopolitical risk. In Switzerland, the

over. We are pleased our portfolio

experienced five consecutive years

such as pension funds need.

drastic action of the Swiss National

managers succeeded in even

of attractive investment returns,

outperforming these strong markets.

but now interest rates are very low,

And we can always rely on two of

the euro was also unexpected. So we

markets are a bit shaky and many

our ‘pioneering but cautious’ pillars

are in for more surprises; we expect

And global equities also did well,

professionals are not so confident

of Quantitative and Sustainability

to have more volatility and this may

albeit mainly because of the

about economic growth prospects.

Investing to drive progress in our

very well go hand in hand with more

strengthening of the US dollar against

But there’s still some value in the

investment techniques. These

subdued returns in 2015.

1

for the period 1 January through 31 December 2014

Bank to give up its currency’s peg to

The value of your investments may fluctuate. Past performance is no guarantee of future results.

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Performance Insights

Japanese challenge As a newcomer, Robeco will have to work hard to gain a foothold in Japan, says Kikuo Kuroiwa, the man at the helm of Robeco Japan.

There are few assets managers in the world with such a track record

|

Kikuo Kuroiwa Robeco has big plans in Japan. After setting up

will do all they can to achieve our mission. But we

a branch office back in 2005, the company has

will have to work exceptionally hard.” Kuroiwa is

now established a local company and received its

certainly very familiar with the key players; he has

Discretional Investment Management license to

been active in the financial world for the past 36

offer a full range of investment services. Robeco

years, 15 of which were spent in New York, Zurich

Japan is targeting three customer segments:

and Singapore. Kuroiwa: “I have learned to operate

corporate and public pensions, financial institutions

in different cultures.”

such as life insurance firms, and wholesale investment fund distributors such as banks and

Rich history

brokers. The current goal is to raise EUR 5 billion in

Robeco is targeting the Japanese market for

assets under management in five years.

foreign shares and bonds and has expertise that is in demand in Japan. Kuroiwa and his team

Kikuo Kuroiwa, CEO Robeco Japan

Ambition

will no doubt draw attention to Robeco’s leading

According to Robeco Japan’s president Kikuo

position in a number of investment segments. More

Kuroiwa, this level of growth is ambitious. “As a

importantly however – as Robeco Japan’s president

newcomer, Robeco has set its sights very high.

knows – is Robeco’s long history. “There are few

Japan, the second-biggest market for asset

asset managers in the world with Robeco’s track

management after the US, is hugely competitive.

record. This is very important for the Japanese.

If Robeco achieves its aims, it can be very proud of

Another appealing factor is that in the 1960s

itself.” Despite the enormity of the task, Kuroiwa

Robeco was one of the first foreign investors to start

has every confidence it will succeed. “Everyone here

investing in Japanese stocks.”

2014

Robeco opens London office Robeco is strengthening its position in Europe with a new office in London.

Hester Borrie, Head of Marketing and Sales and member of the Management Board at Robeco, sees plenty of opportunities in the City.

It will come as no surprise that Robeco is now

we need to have a physical presence in the UK,”

stepping onto the London stage. The British capital

says Borrie. “Because only then can we keep a close

is an important hub for asset management, since it

eye on the trends and regulations. Clients also

is home to the head offices and important regional

appreciate a local presence.”

offices of key distributors and consultants. And the fact that competitors are operating on the doorstep

Waiting room

can be considered an advantage, believes Hester

It has taken a while for Robeco to take this step.

Borrie, who is responsible for launching this new

“When I started at Robeco in 2009, the world was in

business. “It’s always good to have a good sense of

the midst of a financial crisis,” says Borrie. “Robeco

what is going on at the competition.”

developed a strategy of sustained growth at the time.” A few years later, when things had improved

Key market

for both the global economy and Robeco, the

Leaving aside the City’s undisputed importance in

company’s only shareholder – Rabobank – decided

the financial world, there is another key reason for

to put Robeco up for sale. That wasn’t the right time

Robeco to set up this new outpost: the UK is a major

to start out in a new country. Borrie: “With our new

market for asset management – among the world’s

majority shareholder ORIX we are ready to take that

top three. “As serious growth is Robeco’s intention,

step. ORIX supports our strategic plans.”

Our strong product range and client-centered culture will enable us to make our voice heard | Hester Borrie

Hester Borrie, member of Robeco’s Management Board

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Performance Insights

It’s always good to watch the competition

| Hester Borrie

Work in progress

good products,” says Borrie confidently. “We rank

on that. It’s also not unusual in the world of asset

Borrie: “We have recently recruited a first senior

among the world’s most successful companies in

management to operate outside the major financial

member of staff and I am now in the process of

sustainable and quantitative investing.”

centers, where there are fewer distractions from

selecting a second employee. Once that process is

the daily business. And it is better value for money.

finalized, we will look for permanent premises and

Loyal to the domestic market

I have a stunning view of the Meuse river from my

and then gradually increase the headcount of staff

Borrie dispels rumors that the new office in London

office on the nineteenth floor. I don’t want to know

from there.”

is the start of a larger relocation – of the head

what a similar view of the Thames would cost.”

office in Rotterdam to London. “I believe that would

Expertise

be unwise for many reasons. There’s a great deal

Yet how does Robeco, as a newcomer, envisage

of talent in the Netherlands and these people

being able to gain a foothold in such an

know where we are. We don’t want to miss out

exceptionally competitive market? What is Robeco’s position in relation to other asset managers? “Robeco has a compelling story and

2014

Our most innovative achievements Leader of the Twitter pack

CONNECTING CLIENTS TO KNOWLEDGE

Launched two new investment concepts

Connecting with our clients is vital to Robeco. And traditional

Jan Monster

channels aren’t the only option

ROBECOSAM – RobecoSAM launched two

available to us. In 2014 we

new investment concepts in 2014: RobecoSAM

focused on communicating with

Quant Sustainable Global Equities Fund* and

professional clients via social

RobecoSAM Global Small Cap Equities Fund.

media, as we believe that this

The quant product enhances the portfolio’s

is really the new frontier when

sustainability exposure but only takes limited

it comes to engagement. We

active risk, while the small-cap fund leverages our

were so successful that the

expertise in resource efficiency themes within

Financial Times service Ignites,

an active but disciplined investment framework.

which looked at social media developments, called us the

Rainer Baumann

* managed in cooperation with the Robeco Quant team

leader of the Twitter pack.

Maximum value, minimum risks

Significant increases in revenue and doubling of the AuM ROBECO MIDDLE EAST – The Middle East

CENTRAL PURCHASING

team has made great progress in rebuilding

Robeco depends on external

the business from our new base in Dubai.

suppliers for its operations. We

We have seen significant increases in revenue

supported the business with an

and a doubling of the AuM in the Middle

improved approach to selecting

East business through 2014. We expect this

suppliers. This is based on

very strong revenue growth in 2014 to be maintained through 2015 and beyond.

Amr Albialy

maximum value, minimum risk and a guaranteed fair price.

Jochem Gottmers

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Performance Insights

A strong home market base is vital for international expansion With MiFID II approaching, Europe is moving towards a more open and honest fee structure. In the Netherlands, the ban on retrocession fees came into effect on 1 January 2014 and the entire distribution market has switched to the new retrocession-free share classes. The Dutch experience puts us in pole position to advise clients outside the Netherlands, which will follow at a later date. Where do we stand today? Chris Suiker, Robeco’s Head of Wholesale Distribution Benelux, explains.

What happened in the Dutch fund industry?

“What happened was that investment vehicles needed to be more transparent

How did Robeco’s business partners react to the end to distribution fees?

on their cost structure. The majority of funds now need to provide investors with

“We had been communicating with our clients on the planned reform from

a Key Investor Information Document that displays an ongoing charges figure

early on and had discussed the impact of the upcoming changes. This was highly

(OCF) – showing the total cost level – rather than the traditional total expense

appreciated by our business partners. Obviously the impact of the changes

ratio (TER). As a result, asset managers have introduced share classes with lower

had an adverse effect on our clients’ earnings models. Some of our business

management fees that exclude any payment to the distributor.”

partners aimed to motivate clients to switch from execution-only and advisory to discretionary portfolios. For Robeco, the challenge was to ‘convert’ existing

“Cost transparency means that clients will be better able to infer a fund’s

clients to the newly launched retrocession-free share classes. This transition

costs and therefore make a better investment decision. This challenges asset

process went well.”

managers to demonstrate their added value. As an active manager with a proven track record, Robeco can benefit from this. Additionally we were among

How did retail clients react to the new fee structure?

the first to start introducing the ‘clean share classes’ in preparation for the fee

“Many individual investors have opted for execution-only services because they

structure reform and we were able to share our expertise in this particular area

are reluctant to pay for advice. Our own web-based platform offers both Robeco

with asset managers and banks in Belgium, Luxembourg and Germany last

funds and solutions, such as Robeco One and the Life Cycle Funds. This platform

year.”

will benefit from these developments among individual clients.”

2014

How effective were Robeco’s investment strategies in 2014?

“Last year was a good year for Robeco – which is no coincidence, I believe. Since 2008, we have been focusing on our key strengths, including quantitative, sustainability, value equity and credits investing. Robeco has also improved the way it approaches clients. Increasingly we are seen as a provider of solutions rather than a marketing machine that pushes products. Sharing knowledge and therefore creating thought leadership in the focus areas is key in this process.

Putting the client first is really paying off.”

Any new Robeco initiatives you would like to highlight?

“Robeco is set to benefit from the strong trend in the pension market to move from defined benefit (DB) to defined contribution (DC). In response to this market movement, we have launched Robeco Life. Our Robeco Life Cycle Funds are perfect for capital accumulation towards a set end date, such as retirement.

As the fund’s maturity date approaches, the asset allocation is automatically adjusted to provide a gradual reduction in investment risk. The maturity dates of these Robeco funds range from 2020 onwards, serving each and every investor’s investment goal and horizon. At the end of the day, clients are interested in financial peace of mind and want to have confidence in their investment strategies. Robeco can show them the path to achieve this.”

How would you expect Robeco to develop its position going forward?

“Our three-year investment performance is excellent and over the years we have become a prominent global asset manager and thought leader in our four key areas of expertise. In particular, our proximity to the very professional and sizeable Dutch client base, both retail and institutional, will help us to continue to innovate and bring new investment solutions to the international market. Yet to achieve sustainable results you need to leverage your relationship management skills, in order to ensure excellent service delivery that leads to client satisfaction and retention. We’re all set to achieve this.”

Chris Suiker, Robeco’s Head of Wholesale Distribution Benelux

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Performance Insights

Interview with Alan Rubenstein

Alan Rubenstein, member of the supervisory board of Robeco Groep N.V.

In February 2014, Alan Rubenstein was appointed member of the supervisory board of Robeco Groep N.V. Alan, who is currently chief executive of the UK Pension Protection Fund, is also chairman of Robeco´s Investment Committee. He comments on the year that was and the year to come.

What is the role of Robeco’s supervisory board?

“Its role is to exercise oversight over the conduct of the business and work in collaboration with the Management Board to achieve Robeco’s goals. It is our job to offer the Management Board advice, occasionally warning them of potential consequences of their plans and generally working with them to move the company forward. As for shareholders, the supervisory board’s role is about ensuring that Robeco is both a profitable and sustainable business and that risk management is integrated properly in all the things Robeco does.”

2014

The people of Robeco should be proud of what they have achieved | Alan Rubenstein What does the Investment Committee do and why is it important?

What are your observations when it comes to Robeco´s investment capabilities?

“The Investment Committee is effectively part of the supervisory board. It

“Robeco has a very good position at the moment. If you look at the three and

oversees the group’s investment policies, performance and product range. Our

five-year time frames, the Morningstar November report showed that 75% of

job is to ensure that there is good governance in place. For example, we conduct

our speciality products and nearly 90% of our generic products are meeting

detailed reviews of the performance of individual products or product ranges to

their targets, which is a very strong showing. That´s the kind of track record that

assess whether Robeco products are delivering added value and whether clients

not many companies can claim.“

are receiving the appropriate service.”

Any lessons or achievements from 2014 and goals for 2015 that you would like to share?

In what ways have you been able to add value within the supervisory board or the Investment Committee?

“I hope that I have brought a fresh and slightly different perspective. In my

“One lesson learned – again – was that performance goes in cycles and we

career I’ve been both an asset manager and investment banker who has

saw some of that last year. Robeco’s Transtrend, for example, had a difficult

advised on pensions and asset management so I certainly feel qualified to

start in 2014 but came back very strongly later on. We saw strong growth in our

make a contribution. Having worked for US investment banks and major global

quantitative equity products which was very encouraging and continued good

investment houses earlier in my career, I hope to bring a wider perspective that

performance in our Boston Partners products in the US value market. As for

will help Robeco as we go forward and turn ourselves into a global player.”

2015, the Investment Committee´s goals are to make sure that this progress is maintained, but more than anything it is to make sure that we keep a close eye

Could you shed some light on the future of Robeco?

on how performance is developing, how the fund range is developing and that

“We have an ambitious strategic plan covering the 2014-2018 period and the

the Management Board and investment teams are anticipating and responding

advantage of having ORIX as a strong parent and partner. Therefore, I´m keen

to challenges.”

to firstly deliver the plan and also look and see if there are any opportunities to accelerate our growth through acquisition.”

“Some distinct supervisory board themes worth mentioning include helping with the integration of ORIX as the new majority shareholder of Robeco and the

What would be your personal message?

development of the growth strategy for 2014-2018. And a third one was bedding

“As someone who only joined the supervisory board last year, I´ve been thrilled

down a new supervisory board because three of us – Jan Nooitgedagt, Jeroen

with the energy, drive and skills of the people at all levels within Robeco. They

Kremers and myself – all joined within a period of about three months. We

should be proud of what they have achieved. My message to them is that this is

have been getting to know each other to see how we can best work together to

a great company to be part of and I look forward to an exciting few years.”

deliver the growth agenda that we´ve set ourselves.”

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Performance Insights

Star performers in European periphery Kommer van Trigt, manager of Robeco’s global total return bond fund Rorento, looks back with satisfaction at the bond market performance in 2014 and discusses the importance of active management.

“The government bonds of the European periphery were the star performers of 2014 and we were well-positioned to benefit.”

“2014 was a surprisingly good year for investors, especially in European government bonds.

Expectations were for interest rates to rise. They couldn’t go down, after all. But that proved to be wrong again. European interest rates more or less halved, which resulted in excellent returns.

Government bonds in Germany returned 10% and in Spain as much as 17%, but US Treasuries also ended with a very respectable return of 5%. The complete absence of inflationary pressure and lagging economic growth in large parts of the world worked to the advantage of bond holders.”

Europe’s attractive periphery “In 2014 we were aggressively positioned to take advantage of European periphery government bonds. We identified good investment opportunities in the area for a number of reasons: the underlying support from the ECB, some economic improvement in countries like Ireland and Spain and an attractive yield pick-up relative to other fixed income categories. Another plus for us is the liquidity in these bond markets. The market for Italian government bonds, for example, is almost double the size of the global high yield market, so there is always enough trading activity in the market to be able to exit if conditions were Kommer van Trigt, Robeco’s Head of Fixed Income Allocation

to suddenly deteriorate. As bond market liquidity declines every year, this is an increasingly important consideration for us.”

2014

Banks have become safer institutions due to increased regulations | Kommer van Trigt Less rosy year for high-risk bonds

bonds. We accumulated large positions in markets

government bond purchase program. As long as

“High yield bonds and emerging debt, the darlings

such as Italy and Spain, and later also in Ireland

there is an absence of inflationary pressure and

of fixed income investors in previous years, fared

and even Portugal. At the beginning of 2014, no

parts of the world are flirting with deflation, little will

less well in 2014. The returns from these higher

less than 35% of Rorento was invested in European

change in the bond landscape in the coming period.

risk bond markets came in at 2% for high yield and

peripheral debt. As part of our currency policy, we

A lot will depend on further developments in the

-6% (in US dollar terms) for emerging debt. The

positioned ourselves to benefit from a weakening

different economies. We are keeping a careful eye

sharp fall in the oil price weighed on the high yield

of the yen and the euro against the US dollar. This

on wage inflation in particular. Higher wage growth

market. Close to a quarter of the companies that

proved to be a good strategy. We also anticipated

could be a game changer and cause us to modify

issue high yield bonds are US companies operating

an increase in the interest-rate differential between

our bond portfolio. 2014 was certainly a good year

in the energy sector. The termination of the Fed’s

German and US government bonds.

for our bond clients, as once again it demonstrated

bond-buying program also had a negative impact

that bonds should be a permanent feature of every

here.” For emerging markets, the growth outlook

At the beginning of 2012 the interest-rate

diversified investment portfolio. Diversification

deteriorated further and countries that rely on

differential was nil, but by the end of 2014 it had

creates a more favorable risk-reward pattern.”

commodity exports had a particularly arduous year.

risen to over 150 basis points. After the summer

Most countries failed to introduce economic reforms

of 2014, we successfully switched out of high yield

and credit ratings were lowered for many of them.

into subordinated European bank loans. Due to

Emerging currencies depreciated significantly versus

increased regulations, banks have become safer

the US dollar. International investors sought refuge

institutions. This in combination with an attractive

in for example the European bond markets.”

yield pickup, underpinned the case to invest in

German government bonds

Bond returns in 2014 10.3%

this segment. We were cautious on emerging

US government bonds

4.9%

Active management pays

debt throughout the year. The fund’s interest-rate

Japanese government bonds

4.7%

“We use a flexible, benchmark unaware investment

sensitivity was steady at around four years for a

Spanish government bonds

16.7%

style for Rorento and follow a dynamic approach

good part of 2014. Of course in hindsight, higher

Italian government bonds

15.1%

that is based on being in the right bond market

interest-rate sensitivity would have been better,

European corporate bonds

8.4%

at the right time. The international bond market

given how capital-market rates plummeted last

US corporate bonds

7.3%

has developed enormously in the past twenty

year.”

Global high yield

2.3%

Emerging debt*

-5.6%

years, which means there is more and more choice and therefore more to be gained from active

Potential game changer

management. Many of our choices worked out well

“We still see opportunities in the peripheral countries

in 2014, such as favoring European bonds over US

– especially now that the ECB has introduced a

* Returns on bonds issued in local currency have been converted into US dollars Source: Robeco, Barclays Point

17

Performance Insights

AuM (end of year) EUR x billion

Net result EUR x million 246

250

AuM development ‘10-’14 246 bln.

250

250 228

205

150

200

150

150

134

100

100

100

50

50

50

0

2010

2011

2012

2013

2014

135 bln.

123

+81 bln.

+30 bln.

0

0 2010

2011

2012

2013

2014

AuM as of 31/12/2014

150

197 181

Net cash flow 2010 - 2014

150

200

189

Investment results 2010 - 2014

200

AuM as of 01/01/2010

Financials

18

Robeco’s assets under management had increased to EUR 246 billion at the end of 2014 Operating income EUR x million 1000

959

Operating expenses EUR x million

FTEs male/female

800

2000

700 800

776

764

629 723

600

680

500

600

482

Total 1242 Male 832 Female 410

2012

2013

2014

481 1000

400 400

Total 1260 Male 845 Female 415

1500

558 482

Total 1322 Male 894 Female 428

300 500

200

200

100 0 2010

2011

2012

2013

2014

0

0 2010

2011

2012

2013

2014

2014

10 22 21 13 2 2 59 69 5 2 26 15 246

AuM by domicile (as of 31/12/2014)

EM fundamental Quant Equity Credit FI Rates & Aggregate FI Quant FI Thematic US Value Equity HCA Transtrend Private Equity Fiduciary Management Other bln.

33% 14% 48% 5%

Netherlands Other Europe US Rest of world

66% 19% 15%

Equity Fixed Income/Multi Market Other

48% 52%

Institutional Wholesale/Retail

AuM by asset mix (as of 31/12/2014)

Jurgen Stegmann (CFO): Robeco’s total assets under management grew to EUR 246 billion at the end of 2014, from EUR 135 billion at the start of 2010. The increase in AuM in 2014 was a staggering EUR 41 billion, and despite the fact that EUR 35 billion was the result of market appreciation and the strengthening of the US dollar, net inflow was still over EUR 6 billion – four times the 2013 level of EUR 1.5 billion! Our EBIT excluding performance fees was EUR 281 million and close to the EUR 290 million EBIT for 2013. Our bank, Robeco Direct, was ‘carved out’ and is now part of the Rabobank organization. We managed to control costs and further improved efficiency levels and cost awareness throughout the entire group. Customer satisfaction surveys again show that client service levels are high.

In our new 2014-2018 strategy, we will focus on accelerating growth, new strategic investments and improving our risk and control processes.

AuM by client type (as of 31/12/2014)

Unaudited numbers | Source: Robeco

Financials

AuM by investment capability (as of 31/12/2014) EUR x billion

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Performance Insights

Our most innovative achievements A new record-keeping database PERFORMANCE MEASUREMENT

BOSTON PARTNERS – In 2014 Boston

Performance Measurement imple-

Partners solidified its position as

mented a new record-keeping database

a leader in liquid alternatives. Our

for performance figures during 2014

Research L/S Fund generated top-

to support Robeco’s new reporting

quartile returns and raised over

application. In 2015 we’ll be taking

USD 2 billion in assets. The

further steps to improve our tooling

momentum of the Research L/S Fund,

and processes to increase efficiency

combined with the outstanding track

and reduce complexity, to ensure the

record of our Global Equity Strategy,

high-quality and on-time delivery of Johan Hein

Research Long Short Fund generated top quartile investment returns

performance figures to our clients.

Todd Knightly

led to the successful commercialization of our Global L/S Fund, which attracted USD 500 million.

Driving change and enabling colleagues to excel

A year of building momentum

HR REMUNERATION & BENEFITS

Floris Luiten

For HR, innovation is about driving

ROBECO AUSTRALIA – 2014 was a year of building

change for the better and enabling

momentum in the Australian market. Heavily consultant

colleagues to excel. The implementation

driven, to succeed we require ratings for our focus

of the simplified and modernized

strategies (i.e. conservative equity). We instigated a

Reward Framework is a great

concerted, multi-faceted approach of bottom-up activity

example. The integrated Performance

with a specific consulting firm and researcher to achieve

Management process in particular

our goals: brand awareness, researcher reviews, field

empowers management to differentiate

consultant ‘buy-in’, client demand and a buy rating

and reward outstanding performance,

which has led to new business.

the right behavior and development.

Stephen Dennis

2014

Harbor Capital Advisors It was the best of times, it was the worst of times David G. Van Hooser quotes the famous opening line of Charles Dickens’ novel ‘A Tale of Two Cities’ when being asked to comment on 2014. He is chairman and president of Harbor Capital Advisors, Robeco’s Chicagobased subsidiary, known for its ‘manager of managers’ approach.

Looking back, what kind of year was 2014?

“For us it was a record year in terms of financial results. Yet, our performance in investments was not as good as we would have liked. Our small and midcap products did perform well but some of our large cap and fixed income products did not. It was a year when PIMCO, a long-term subadvisor that works on four funds, suffered some extraordinary turmoil.

This turmoil and the publicity surrounding it caused

What does Harbor Capital Advisors’ business model look like?

asset outflows for only the second time in our history.

“Rather than trying to manage the money

bothered by these kinds of situations as they happen.”

We continue to focus on the long term and are not

ourselves, we actually hire the best managers we so we are 100% subadvised. In the 19 primary

What growth did Harbor Capital Advisors achieve?

funds that we offer we have some 15 subadvisers

“When Robeco purchased us in 2001, we indicated

with proven track records who specialize in a

that we would roughly double the size of our

particular asset class and make all of the day-to-day

business every five years and we’ve been able to

investment decisions for our funds.”

accomplish that. Today, we manage assets of about

can find to manage our strategies and products,

USD 80 billion.”

How do you manage to select the best performing managers?

And finally, what are your goals for 2015?

“Selecting managers is part science, part art. We

“Our goals are to maintain the investment products

use as many quantitative tools as we can to balance

we have now and ensure they perform well. The

emotion and judgment. We are looking for people

next key goal is to find new managers. We hope

who want to beat the market for the right reason and that is for the benefit of their investors rather than their personal benefit.”

David G. Van Hooser CEO HCA

to find some so we can introduce new products in 2015. Those are the primary objectives for 2015 and for every year.”

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Performance Insights

Investment in renewable energy and resource efficiency are key In November 2014, Asia Climate Partners (ACP) was launched with the first close of a private equity fund aimed at making commercially-oriented investments across a variety of environmentally supportive, low-carbon opportunities in Asia. Leni Boeren, Chief Operating Officer at Robeco, comments on this innovative vehicle for growth.

What is the background to this deal?

“Let me give you some facts first. ACP is a joint venture between Robeco, ORIX and the Asian Development Bank (ADB). ADB, which is dedicated to reducing poverty in the Asia and the Pacific region, chose to sponsor a private equity investment platform to focus on a variety of climate-relevant investment opportunities. Robeco, together with ORIX, was selected to provide support and advisory services to the fund. The creation of ACP is a remarkable achievement given that we are establishing a private equity business that is in many respects the first of its kind.”

What made ADB decide to select ORIX and Robeco for this?

“The combination of ORIX and Robeco is unique. ORIX has a successful track record in investing in resource efficiency and renewable energy-related direct investments across Asia. Robeco has in-depth expertise in the field of Sustainability Investing and a proven track record in structuring and managing long-term investment solutions and mid-market and resource efficiency private equity investments. In my

It is our shared ambition to become the region’s leading investor in low carbon projects | Leni Boeren

opinion, ACP now combines the unique strengths of Robeco as a leading global asset manager with ORIX and ADB as two of the most active investors in the clean energy, resource efficiency and environmental sectors in Asia. It’s a perfect fit.”

What sort of investments will the fund be making?

“The fund will follow a mid-market growth strategy investing in clean tech, natural resource efficiency, water, agriculture, forestry and other climate-friendly companies. Its aim is to generate market-driven, risk-adjusted returns with a positive environmental and social impact. The investments will be opportunistic and made on a deal-by-deal basis. There will be no sector or regional focus. ACP will pursue transactions across the Asian continent, at first focusing on China, India and Southeast Asia.”

2014

How will the fund be advised by the Private Equity team? ”All of Robeco’s private equity related activities are integrated in RobecoSAM, our subsidiary that focuses exclusively on Sustainability Investing. The RobecoSAM Private Equity team will provide resources, qualified deal flow – particularly fund and co-investment deal flow – and other advisory support services to ACP’s team of experienced investment professionals, with strong regional and sector expertise based in Hong Kong.”

Why is this such a groundbreaking platform?

“It is a well-known fact that Asia’s economies are among the fastest growing in the world and face significant environmental challenges. Given the expected impact of these challenges and the historically low levels of capital deployed in these areas, investment in renewable energy and resource efficiency is key and has great potential. This makes the fund a welcome addition to existing climaterelated investment funds and an attractive proposition for institutional investors seeking sustainable, long-term investment opportunities.”

“It is groundbreaking because this partnership demonstrates our shared focus on sustainable investing solutions. ACP will benefit from the combined strengths of Robeco as a global asset manager and ORIX and ADB, which are two of the most active and successful investors in the region’s low-carbon sector. This is also a huge cash injection, as most funds in the region to date have ranged from USD 100 to 150 million.”

To conclude, what are the ambitions going forward?

“ACP is an attractive investment proposition for institutional investors. ADB, ORIX and the UK government participated in the first closing at USD 392 million.

The response to the launch of the fund has been very positive and I’m confident that our momentum will continue in 2015. We’re all very excited about this innovative proposition and I firmly believe that we will eventually be able to scale up the fund to USD 750 million or 1 billion.”

Leni Boeren, member of Robeco’s Management Board

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Performance Insights

Highlights of the Corporate Responsibility Report 2014 Robeco is a global leader in Sustainability Investing. We are convinced that integrating environmental, social and governance (in short: ESG) factors facilitates better-informed investment decisions. Therefore Sustainability Investing is a prominent part of Robeco’s 2014-2018 strategy.

the results and are committed to following up on our client’s feedback. Further to this, we have decided to upgrade our client reporting in 2014.

With a new software tool in place, clients can benefit from the quick availability of factsheets and detailed portfolio reports. As part of the upgrade, specific ESG information was added to factsheets in

In addition to our activities in the field of Sustainability Investing, we believe that corporate social responsibility should be practiced in everything we do.

The highlights of our achievements in 2014 are summarized below. The full report can be downloaded from www.robeco.com.

Q4 2014.

Personal development of employees Robeco has the ambition to give employees room to develop and grow personally within a dynamic and professional corporate culture. In 2014 the average amount spent per employee on personal development was EUR 1,500. Further to this,

Client satisfaction

Robeco Learning World was launched, an online

In addition to considerable personal interaction

environment for personal development.

between clients and Robeco senior management, account managers, client servicing teams and

Sustainability Investing in figures

portfolio managers, we make sure via both bespoke

(Total AuM EUR 246 billion | year end, in billion EUR)

and syndicated market research that we have the latest information on market trends and client

Employee satisfaction

2014

2013

2014

2013

needs. For example on the institutional side we

Assets in sustainability theme funds

2.8

3.1

have subscribed to the European IPE Pension Fund Perception Program which is an initiative of a large

Assets for which ESG integration has been implemented

82.6

74.7

General satisfaction

7.8

7.4

number of European pension funds that went live in

Assets ‘under dialogue’

65.6

53.7

Number of respondents

791

820

Assets ‘under voting’

41.4

37.6

% of total surveys sent out

86

75

Q4 2014 and enables the rating of services provided by asset managers. We look forward to obtaining

2014

Our most innovative achievements Appropriately positioned to execute our strategic goals

New tool: behavioral finance

COMPLIANCE – In a joint effort with

ROBECO CANARA – We have enhanced our research process by

many people we managed to reduce

introducing means of addressing biases in it. One new tool is a

and simplify the number and types of

behavioral screener. This tool highlights aspects that are likely to be

licenses in the Netherlands, while simul-

influenced by a high positive or negative bias and urges the team to

taneously restructuring the legal set-up

reconsider the fundamentals. Back-testing this screener has confirmed

of the organization and implementing

its usefulness. Another innovation is B3 (BULL, BEAR, BASE), which is

the AIFMD legislation. Robeco is now

a new way of framing end recommendations of analysts. B3 requires

appropriately positioned to execute

analysts to give three scenarios and target prices with probabilities of

our strategic goals. It was a complex

reaching them to help them think through a diverse set of conditions.

process, but we succeeded – also thanks Robert Slange

to open and positive discussions with the regulators.

Move to a virtual private cloud data center

IT CONTRACTS & INFRA PROJECTS My most innovative achievement of 2014 was the contract renewal with HP, and the subsequent move from a traditional to a virtual private cloud data center. In the IT market Robeco is well known for its innovative Ton Ligtvoet

attitude.

Nimesh Chandan

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Performance Insights

Increasing distress 2014 was a year of turbulence and turmoil for markets and investors worldwide. How does Hans Rademaker, Chief Investment Officer and member of the Management Board at Robeco, see the previous year? “More than ever, it is about making active choices in your investment portfolio.”

Looking back, where did we see increased distress?

“To give you a rough sketch, last year China grappled with slower real growth and the emerging markets as a whole showed diverging developments across the various countries. Europe’s growth rate was disappointing. The European Union demonstrated low growth and borderline deflation, with EU nations continuing to argue about stimulus versus austerity. Geopolitical tensions increased with conflicts in Ukraine, Iraq, Syria, North Korea and West Africa flaring up. On the financial markets, we saw a further unexpected downtrend in interest rates and increasing divergence in monetary policy in the major economies.”

What effects have there been?

“One of the lessons of continued volatility is that it all boils down to robust portfolio construction with sufficient diversification. Investors will always be vulnerable to sharp market fluctuations. As a result, they are realizing that diversification is imperative and this requires sophisticated portfolio construction and risk management skills. Hence, I believe the demand for active management is stronger than ever. In today’s volatile times, part of the

Hans Rademaker, member of Robeco’s Management Board

2014

The increased divergence in monetary policy will remain a key theme for markets | Hans Rademaker

while yet another part is looking at what the European Central Bank’s measures

Could you mention some do’s and don’ts for long-term investors?

will bring. While the ECB, Bank of China and Bank of Japan are moving towards

“Investors should have a long-term investment plan in place based on achieving

more easing, the Federal Reserve stopped its quantitative easing (QE) program

a return that meets their individual goals. They will have to decide what they

in October 2014 and is expected to raise rates somewhere in 2015.”

are willing to invest in and what level of risk they are willing to accept. This also

investor community will start selling, another will wait to see what happens,

depends on, for example, how liquid or illiquid you want your portfolio to be.

How can investors position themselves for increased market volatility?

There is no holy grail in investing and this is where Robeco comes in: to help you find the optimum solution for your individual goals.”

“Apart from geopolitical tensions, the increased divergence in monetary policy – ECB versus Fed – in itself leads to more volatility. Moreover until recently

“In an ideal world, investors should be able to follow counter-cyclical strategies.

emerging markets were categorized as one homogenous group, but their

As always, it is wise for investors to stay rational, control emotions and distinguish

economic paths are diverging due to widening differences in economic stability

myths from facts. Investors might even keep temporary cash reserves to help

and growth perspectives. This urges individual investors to be more selective and

pursue new opportunities created by volatile markets. Individual investors in

pay more attention to country and dynamic asset allocation. More than ever, it is

particular may want to consider adding a fixed amount to their investment on

about making active choices and not just following the benchmark.”

a regular basis, to avoid being distracted by short-term crazes. They should also remember that a sound plan takes time to blossom, so don’t expect to reap the

“For a well-diversified portfolio, neither active nor passive strategies should

rewards of investing overnight.”

be ruled out beforehand. Index investing may look appealing, but it is not superior to other investment styles or entirely without risk. From a governance

Looking ahead – is volatility here to stay?

perspective, would you be willing to invest in a blind pool of 30 countries

“The increased divergence in monetary policy, divergence in regional growth

without knowing its specifics? To avoid this, Robeco is for example utilizing ESG

and a return to more normal levels of asset-specific volatility will likely trigger

factors in its Country Sustainability Ranking. By focusing on selected ESG factors

volatility in 2015. With differences in monetary policy, economies in Europe

such as aging, competitiveness and environmental risks, as well as taking into

struggling and geopolitical tensions continuing, higher volatility is very likely

account a country’s position in the economic cycle, Robeco offers a view into

and it may even last beyond 2015. As the saying goes, volatility is the friend of

a country’s strengths and weaknesses that is not typically covered by rating

the patient investor. Investors can take advantage of declines by buying more

agencies. Combined, these can provide a powerful tool for determining the

stocks or bonds at lower prices and selling these same securities at higher

attractiveness for government bonds, enabling portfolio managers to make

prices.”

better-informed investment decisions.”

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Performance Insights

A big step forward 2014 was a busy year for Robeco’s risk managers. There were periods of high volatility in the markets, constant new legislation and regulatory changes, and work began on an entirely new corporate risk system for the Robeco Group. Managing Director of Group Risk Management Monique Donders shares her experiences.

“There were episodes of significant turbulence in the financial markets, as well as a number of crises – or near crises – such as the situation in Ukraine. We were also constantly confronted with new regulations, which had to be integrated into the risk systems we use to monitor our clients’ portfolios. Lastly, we took an important step by designing a risk management system for the Robeco organization.”

Was a new risk management system needed?

“The system we have developed enables us to factor different risk aspects into our strategic and tactical decisions in a more consistent and effective manner. It reflects Robeco’s business model and strategy more closely. The management information for the Management Board has also been improved.”

What type of risks were considered in the design process?

“We started by identifying the components in our operations that we must protect at all times in order to be able to continue to serve our customers. As set out in Robeco’s mission statement and the 2014-2018 strategy, these are: our reputation, investment results for clients, employees and financial stability.

Each of these components has been translated into a set of concrete indicators and standards called the ‘risk appetite statement’. We developed this together with representatives from senior management, the Management Board and the supervisory board. The risk appetite statement enables us to monitor, assess and adjust risks.”

2014

In designing the new business risk system, was Robeco also inspired by examples from outside its own sector?

(everything under control), yellow (caution) and red (adjustment required) – to

“Certainly – we looked at a number of examples of effective risk control outside

In addition to the indicators, we will also focus on risks that cannot very easily

the financial sector and extracted elements that we could employ for Robeco.

be translated into criteria and how the different risk types relate to one another.

We studied a broad range of organizations, from the Eye Hospital and KLM to

This qualitative analysis is an important addition to the quantitative part.”

demonstrate how Robeco’s current risk profile relates to what we find acceptable.

the Royal Netherlands Sea Rescue Institution. They all have different methods for identifying, analyzing, mitigating and accepting risks.”

What are the key advantages that Robeco’s new corporate risk system offers?

Has the new risk system been fully implemented?

“It is completely tailored to Robeco’s business model, mission and strategy,

“Almost. The framework is nearly complete. In the first quarter of 2015 we will start

making the different components recognizable for our management and

reporting on the various indicators, to which we have now assigned colors – green

regulators. This gives them an instrument to weigh up the opportunities that arise against the possible risks related to them. This is a big step forward.

Besides mapping the current risks, the system enables us to look ahead. It can also serve as a sort of check list for important decisions: have we touched all the bases? Do we still feel comfortable with the new level of risk or would we like to lower it in certain areas?”

Do I detect a hint of pride in your voice?

The risk appetite statement enables us to monitor, assess and adjust risks

“You do. I think this will provide our organization with the risk model it needs.”

Has anything else changed with respect to risk management?

“The Compliance, Legal Affairs and Risk Management departments were moved onto the same floor a few months ago. This physical integration has resulted in more interaction and consultation on our clients’ portfolios and other riskrelated matters. The relocation has thus further improved the quality of our second line of defense.”

A risk manager is paid to see dangers everywhere. What dangers do you see now, at the start of 2015, for Robeco?

“First and foremost, I am concerned about the geopolitical tensions in different parts of the world, for example in Russia and the Middle East. We don’t yet know what impact these will have on the markets we invest in. We also have to be careful that our decisions are motivated by more than just rules and regulations.

Monique Donders, Robeco’s Head of Group Risk Management

Robeco’s primary concern is to find solutions and achieve attractive returns for our clients. And the role of risk managers is to ensure that we don’t lose them.”

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Performance Insights

Volvo Ocean Race strengthens our international ambitions “In 2014 we brought the marketing strategy more into line with our international ambitions.” Edwin Rietkerk – Head of Group Marketing & Retail – on setting courses, taking risks and ensuring we move ahead under full sail.

From a customer perspective, the

appeal. We chose ocean sailing

the Volvo Ocean Race gives us the

most visible aspect of our change

and this specific race because of

opportunity to receive our clients

of course is the new international

the striking analogy with the field

all over the world and to speak with

communication concept, in which

in which we operate. Risk and risk

them in a very special environment.

image plays a more important

management are vitally important

As General Manager for Spain Javier

role. “Images are understood more

in both sailing and investing. Ocean

de Vinues said “They arrive as clients

universally than text and therefore

sailors are forever collecting data too

and leave as friends.”

are able to create more consistency

– to identify patterns and risks, but

in a campaign,” explains Rietkerk.

also to establish what their standard

The sport of sailing, and in particular

“The image we use is employed very

is, and then discover how and when

ocean sailing, has always been

consistently in all our publications,

they can exceed that standard or

surrounded by wonderful stories.

which creates greater synergy.

benchmark. Ocean sailing has the

Rietkerk: “This year the boats are

international appeal we seek, while

all identical, including the sails and

Sponsorship is a good way of building

at the same time you can experience

lines. It’s the crew that makes the

brand recognition. In the Volvo Ocean

it from close quarters – quite literally:

difference. So isn’t it amazing when

Race we have found something with

you can take your clients on board.

after 25 days at sea you finish just 15

great national and international

Over the course of nine months,

minutes ahead of your opponents!”

2014

This year the boats are all identical; it’s the crew that makes the difference

Facts & figures Team Brunel uses a 65 foot (approx.20 meters) Volvo Ocean Racer. The mast is over 30 meters high and when sailing downwind, the sails have a combined surface area of 578 m2, which is bigger than a basketball court. The boat weighs 12,500 kg when empty, has 7 different sails and can reach speeds of almost 40 knots (over 70 kilometers) an hour.

Edwin Rietkerk, Robeco’s Head of Group Marketing & Retail

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Performance Insights

Pioneers in Factor Investing In 2014 Robeco went live with its Factor Investing Solutions: tailored solutions based on multiple factors. “Robeco is not the founder of factor investing, but we are among the first to translate the theory into practical investment solutions,” says Robeco’s Head of Factor Investing Research Joop Huij with pride. Huij has identified a strong demand for this evidence-based approach to investing from the professional market.

More than ever, it is important to base investment decisions on evidence

Joop Huij, Head of Factor Investing Research

2014

“Factor investing uses scientific insights that show

In which market segments does Robeco see good opportunities?

that in addition to the reward for taking risks, there

“We have selected three ‘sweet spots’: the low-risk

How is factor investing positioned in the discussion on active versus passive investing?

are other premiums to be earned in the market.

segment (low-volatility stocks perform better than

“We see it as a third route – between active and

These premiums are referred to as ‘factors’. The

more volatile ones), the value segment (value

passive. Active investors have a very high degree of

scientific background of factor investing dates

stocks perform better than growth stocks) and the

freedom in the investment process; factor investors

back over sixty years. Last year the Nobel Prize in

positive momentum segment (stocks that have

don’t. At the same time, factor investments are

Economics was awarded to researchers who have

performed better recently will continue to do so

more heterogeneous than passive investments,

done a lot of work in this field. Robeco has long

in the coming period). We then look at what the

which track movements in indices.”

used factor insights, but tailored solutions based on

optimal solution could be for each client, based on

multiple factors are new.”

preferences and his or her current portfolio. There is

Factor investing?

no optimal mix of factors.”

What is making this investment approach so popular?

But isn’t factor investing just one of the many smart beta strategies?

“No, not in the slightest. Most smart beta investments are merely based on statistical

“Clients appreciate factor investing’s academic basis.

Why do these sweet spots exist in the market?

The demand for hard evidence that an investment

“What sets us apart – and we see this as a shortfall

It’s better to use any information you have on the

style actually works has increased as a result of

in the academic literature – is that we want to

origin of these patterns in the investment process

the crisis. Investing without clear rational reasons

explain the existence of sweet spots. The academic

too, because this enables you to provide extra value.

is a thing of the past. Asset owners have greater

research does not go beyond discovering patterns.

With most smart beta approaches it is assumed

responsibility and therefore more to explain as well.

We also want to know why they exist, because

that the premiums are a way of compensating for

Regulators have also become more critical. And

this is just as important. We think that the career

risks. However, we see no evidence to support this

the fact that this investment method offers higher

concerns of asset managers have an impact on the

notion.”

expected returns is of course also appealing.”

premiums. Many asset managers have an interest

What extra returns does factor investing deliver?

patterns. Which is good, but not optimal.

in taking extra risks to enhance the likelihood of

Lastly, who is factor investing for?

higher rewards. Asset managers that operate in a

“We want to offer tailored solutions to large

different way can benefit from this.”

institutional customers. This matches Robeco’s

“Our research shows that a fund with exposure

ambition to further grow in the institutional segment. Factor Investing Solutions is an important

more basis points than an average active fund

If everyone embraces factor investing, will the extra returns come to an end?

that doesn’t use factor investing. Exposure to any

“More money will be put into factor investing,

of factor solutions flexibly, in order to better serve

two factors increases this return to some 330 basis

which may reduce the size of the premiums

multiple customers. Alongside pension funds, we

points, and the result is even better with exposure

somewhat. But this method of investing is certainly

are now also focusing on sovereign wealth funds

to three – an outperformance in excess of 350 basis

not for everyone, so it could still be possible to earn

and other professional investors.”

points per annum.”

premiums in the future.”

to any one factor earns a return of around 160

part of this. We want to be able to use the range

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34

Performance Insights

We stick to the three circles It was a momentous year for Robeco Boston Partners’ Chris Hart, whose Global Premium Equities fund has gone from strength to strength. He won a record nine Morningstar awards for the success of the ‘three-circles’ strategy whereby we only select stocks that display momentum, offer great value, and have strong business fundamentals.

“The fund was in the top decile of peer performance, and that’s a tribute to the consistency of our process and philosophy of generating consistent types of returns with strong compounding effects over time.”

For 2015, Chris believes he will see more European stocks in the portfolio.

The fund had its highest ever weighting

It was a momentous year

to US companies – especially large caps – and its lowest to Europe in 2014 due to the economic divergence in the US and Eurozone economies.

“The highlight for me for 2015 would be a much larger exposure to small

Chris Hart, Portfolio Manager

and mid caps in the portfolio. We’ve

Robeco BP Global Premium Equities

shown we can do very well over seven years through various market cycles, but the real alpha performance is

Investors voted with their feet: the

circles – the only change is where we

“My highlight for 2014 was the asset

going to be based upon what we can

fund attracted net inflows of USD 720

find the three circles from a sector,

growth, as we rose above USD 2 billion

find in the small to mid cap area.

million in 2014 and the assets under

region or market cap perspective,”

for the Global Premium suite of

We’re already ideally positioned for

management in the Luxembourg-

says Chris, who is based in Boston.

products, including the UCITS fund,

that recovery – it’s about being in

registered UCITS fund approached the

“Right now, the portfolio is still

and the success that we’re having

the right place at the right time. The

‘blockbuster’ USD 1 billion mark. For

weighted towards large cap and the

from an asset raising perspective.

philosophy that we employ allows us

the year, the fund outperformed its

US but potential opportunities are

That type of momentum from a

to achieve that.”

benchmark, the MSCI World AC Index.

starting to appear in Europe from a

product development perspective was

“There’s never a change in the three

valuation perspective.”

the real highlight.”

2

Performance Insights

Contents Interview Roderick Munsters reflects on 2014 and looks ahead to 2015.

Financials P. 6

Full speed ahead Introductory note

P. 4

Ocean racing and investing share some striking features. Hence Robeco’s sponsoring of the Volvo Ocean Race.

Acceleration of growth around the globe

Robeco is strengthening its position in Europe with a new office in London. Meanwhile there is a lot of work to do to gain a foothold in Japan. Kikuo Kuroiwa, ‘helmsman’ in Japan, and Hester Borrie talk about growth around the globe.

246

250 205 200

150

189 150

150

2010

2011

100

50

P. 30

A big step forward P. 28

0

2012

2013

The theory of the three circles

2014

P. 18

P. 34

“Investment in renewable energy and resource efficiency is key” P. 8

Leni Boeren, Chief Operating Officer at Robeco, comments on the innovative launch of Asia Climate Partners (ACP) in November 2014.

The information contained in this document is solely intended for professional investors

P. 22

2014

2014

Performance Insights Important information This Performance Insights 2014 has been prepared and presented by Robeco Groep N.V., which is incorporated in the Netherlands. It is solely intended to supply the reader with general information about the investment-management activities and assets under management of Robeco Groep N.V. and its subsidiaries worldwide. It does not constitute an offer to sell or solicitation of an offer to buy any investment product or program offered by Robeco Groep N.V. or any of its subsidiaries, and is not intended to be used as the basis for an investment decision.

Robeco Groep N.V. provides investment-advisory services, including investment advice on investment products and programs, through its authorized local subsidiaries. All investment-adviser subsidiaries and affiliates are registered with their respective local regulators.

Robeco Institutional Asset Management B.V. 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

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