Concentrated portfolio with high conviction views
Strong focus on Return on Invested Capital, Free Cash Flow and ESG
Uncovering material ESG factors and quantifying this impact in the valuation
Active sustainable approaches that truly deviate from market indexes can make a difference, now more than ever. Our high-conviction strategy aims to outperform its reference indexes over a three- to five-year investment horizon. This approach results in concentrated portfolios of attractive stocks featuring a high active share, low turnover and full ESG integration.
The strategy is rooted in our rich heritage and extensive experience with global equity investing since 1930. It allows our clients to benefit from a portfolio consisting of our very best investment ideas: only those stocks in which the investment team has the highest conviction enter the portfolio. The benchmark-agnostic and unconstrained character of our high-conviction strategy allows our portfolio managers to build portfolios comprising stocks they consider to be attractive from a fundamental, sustainability and valuation point of view.
As these portfolios are often contrarian and truly differ from market indices, it may take time for the investment case to develop in higher stock prices. It’s important, therefore, not only to have a high active share portfolio but also a long investment horizon. As an additional benefit, this results in lower portfolio turnover and hence lower transaction costs.
The strategy is managed by Robeco’s Fundamental Equities group of more than 60 investment professionals located in Rotterdam, Zurich, Hong Kong and Shanghai.
Only those with patient investment strategies on average outperform Martijn Cremers
The high-conviction strategy can be applied to any broad investment universe. Robeco currently manages high-conviction portfolios for Global, European, Emerging and Asian equity markets.
Global Stars strategy focusing on three key criteria:
High return on invested capital (ROIC)
High free cash flow generation
Material ESG factors and integrated valuation. The strategy has both a lower ESG risk profile and significantly better environmental footprint than the reference index.
High-conviction Asia portfolio with a clear value style. Though most investors invest in Asia for growth, historical return patterns of Asian-style portfolios confirm that superior returns are generated by value. The sustainable version has both a lower ESG risk profile and significantly better environmental footprint than the reference index.
Robeco has been investing in emerging markets since 1930 – just one year after our company was founded. The strategy targets the best countries and stocks within the emerging markets universe, irrespective of any benchmark. The sustainable version has both a lower ESG risk profile and significantly better environmental footprint than the reference index.
The strategy applies a systematic, bottom-up stock selection process that results in a concentrated portfolio of attractively valued sustainable companies diversified across sectors. The strategy has both a lower ESG risk profile and significantly better environmental footprint than the reference index. The strategy also excludes each sector’s bottom 20% of companies as ranked on ESG risk scores from the investment universe.
The strategy seeks to promote and advance gender diversity and equality by investing globally in companies with superior performance across a broad range of gender- and diversity-specific criteria including board and management diversity, equal pay, talent retention and well-being. Stock selection combines gender and diversity scores with rigorous fundamental analysis with the aim of achieving a better return than the index.
Our high-conviction strategies are classified under the EU Sustainable Finance Disclosure Regulation as Article 8. The strategies promote, among other characteristics, environmental and/or social characteristics, which can include exclusionary screening, ESG integration, ESG risk monitoring and active ownership.
Our ESG integration goes well beyond simply avoiding stocks from typically polluting sectors such as fossil fuels; ESG analysis is integrated in every step in the investment process. We know that sustainability is a long-term force for change and therefore strive to integrate ESG across our investment solutions, actively engage with companies to change their practices, and work on real impact. We use sustainability factors to identify the risk and return potential in business models of companies. We focus on the most material sustainability factors that could potentially impact the value-creation capabilities of a company. Our ESG research enables us to make better-informed decisions and integrate ESG insights into our proprietary valuation model.
In addition, we apply value-based exclusion criteria based on Robeco’s exclusion policy. For the sustainable range we ensure that the portfolio’s ESG risk profile is lower than the reference index and that the environmental footprint (GHG emissions, water use and waste generation) is at least 20% better than the index.
Flexible and opportunity-driven instead of bound to a benchmark
Concentrated portfolio to reflect our highest-conviction stocks
This has been a core expertise for us for decades
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