Performance insights 2015 by Robeco

2015 Performance Insights

Performance Insights

2015

Contents Interview

Financials

Robeco Group subsidiaries & joint ventures

Leni Boeren, Chair and CEO of the Robeco Group Management Board reflects on the changes and the position of the company in an increasingly challenging world. P. 6

Introductory Note We take you on a world tour of various Robeco Group subsidiaries: Harbor, Robeco, RobecoSAM, Boston Partners, Transtrend and our joint venture CanaraRobeco.

We’ve moved!

Assets under management at an all-time high for the seventh consecutive year and a record high net profit P. 12

P. 4

P. 18

FIRST is Robeco’s new Rotterdam office. Monique Donga and Ton van Gaalen tell about the wow factor associated with putting employees and clients first.

P. 16 P. 18 P. 26 P. 28 P. 30

“Robeco BP Global Premium Equities outperformed the benchmark in 2015 mostly due to the ‘unloved’ sectors of the market”

P. 32

P. 9, 15 & 34

Sustainability Investing is the new normal Michael Baldinger reflects on the evolution of SI to mainstream status and RobecoSAM’s role in promoting P. 26 sound business practices and innovation.

Volatility brings opportunities for high yield bonds

Pursue accelerated global growth and excellent results We are proud of Robeco Group’s contribution to ORIX as a financial services group which provides innovative products and services, says Makoto Inoue.

Sander Bus takes a look at the high yield bond category and explains how Robeco High Yield Bonds was able to outperform the benchmark in 2015 in a market under pressure.

P. 32

P. 22

P. 10

Eye on the price, eye on the prize

India Rising

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

HARBOR CAPITAL ADVISORS ROBECO RobecoSAM BOSTON PARTNERS TRANSTREND CANARA ROBECO

Achievements we can build on

P. 30

The low-vol factor awakens “Why wouldn’t factor investing work for credits?” P. 20 Patrick Houweling gives an answer.

We always encourage investors to focus on the long term P. 16

Performance Insights

2015

Introductory Note

We take you on a world tour of various Robeco Group subsidiaries Last year turned out to be another great year for the Robeco Group. We ended 2015 with EUR 268 billion in assets under management, the highest figure in our history and generated a record high net profit of EUR 238 million.

However, it was also sometimes a difficult and

of the investment opportunities that arise in

We expect the markets to remain volatile this year.

challenging year with market volatility and

stressed markets, to encouraging investors to be

However, we are absolutely confident that Robeco

economic and geopolitical uncertainty. In the 2015

patient and focus on the long term. It shows how

Group will be able to guide its clients through

edition of our Performance Insights we elaborate

we offer our clients the unique advantage of a local

these turbulent times and help them weather the

on how we managed to secure solid performance

presence and specialist investment capabilities

extraordinary conditions which characterize todayâ&#x20AC;&#x2122;s

for our clients in these extraordinary times.

combined with our global support and expertise.

financial markets.

We take you on a world tour of various Robeco

This year saw major changes for Robeco Group,

Leni Boeren, Chair and CEO of the Robeco Group

Group subsidiaries: Robeco, Boston Partners,

with changes to our governance structure and to

Management Board

Transtrend, Harbor Capital Advisors, RobecoSAM

the Management and Supervisory Boards. Further

Roland Toppen, CFO of Robeco Group

and our joint venture CanaraRobeco. They give us

on in this publication you can read more about the

an update on what has been happening in their

idea behind our new structure. Robeco also moved

markets, what questions clients have had and

to its new office, FIRST. Read about how this new,

how we provide them with answers and solutions.

open and transparent work space, the new way of

These range from helping Australians to prepare

working, and a state-of-the-art IT infrastructure will

for retirement to addressing the trend of increasing

facilitate our work and enhance the service we offer

numbers of Indian investors using mutual funds to

our clients.

realize their financial goals. From taking advantage

Performance Insights

2015

New destinations in a changing world

We want clients locally to benefit from our world class investment capabilities Leni Boeren, Chair and CEO of the Robeco Group Management Board reflects on the changes and the position of the company in what is an increasingly challenging world.

“Where our clients are and what our clients are

result of in-depth research of industry best practice

looking for is changing, so we are changing as

worldwide, together with detailed discussion

well,” says Leni Boeren. And the governance of

between management and supervisory board

Robeco Group will change in 2016. Where this

members, shareholders and regulatory authorities.

publication mainly looks back at Robeco Group’s

The resulting changes bring the governance

achievements in 2015, the company announced an

structure of the business fully into line with

important change in its corporate structure recently.

European Alternative Investment Fund Managers

After 87 years Robeco Group will be transformed

Directive (AIFMD) guidelines for Robeco. In order

from an operational holding company to a financial

to remain compliant with the requirements of the

holding company for its subsidiaries Robeco, Boston

AIFMD, Robeco Group and Robeco cannot be too

Partners, Harbor Capital Advisors, Transtrend,

interdependent.”

RobecoSAM and its joint venture CanaraRobeco.

new structure reflects the current global industry

Robeco Group has a broad and focused range of specialized investment boutiques. What is the first thing that comes to mind when you think about them?

and market trends and will help guarantee the

Boeren: “When thinking about Boston Partners I

company’s continued expertise in investments,

appreciate their distinctive world class investment

distribution and service, all -in the best interest of

capabilities for value equities and their long/

our clients.

short suite of products. Transtrend is known for

Robeco is an asset management subsidiary with its own executive management and now also has its own Supervisory Board and control functions. This

the pure focus on systematic trading strategies

Leni Boeren, xxxxxxxxxx

What is the rationale behind the changes to the governance structure?

that it has had for 25 years. RobecoSAM has an

Boeren: “To have a clear distinction between the

provided a unique and broad range of sustainability

asset management businesses and the financial

solutions for investors and corporates for more,

holding functions, just as other leading global

than 20 years. And with its ‘manager of managers’

asset management firms. The new structure is the

approach to investing, Harbor differentiates itself

exclusive focus on sustainability investing and has

Performance Insights

2015

Achievements we can build on

We are continuing our growth strategy and are right on track

from its competitors by identifying experienced and

equities manager with a global distribution

specialized portfolio managers with proven track

network. In addition to fostering growth at Harbor

records to make all of the day-to-day investment

Capital Advisors, we will also further strengthen the

Why are you planning to leave Robeco once the transition to the new corporate structure is completed?

decisions for its mutual funds. Robeco is a leader in

distribution of Robeco products in the US.”

Boeren: “Currently I hold several positions within Robeco Group, as CEO and chairman of

quantitative investing and factor investing, fiduciary investment solutions and a broad range of both

“In Asia we are also further developing our sales

the Management Board and chairman/board

equity and fixed income strategies, some of which

and client service setup and will leverage on

member at Robeco Group’s subsidiaries Boston

date back to 1929. I’m proud to present all of them

the ORIX network in Japan. Our Discretionary

Partners, Harbor Capital Advisors, Transtrend,

in this edition of ‘Performance Insights’.”

Investment Management (DIM) license there

Robeco and RobecoSAM. After the transition

Chris Hart Portfolio Manager Robeco BP Global Premium Equities

Jacqueline Lommen Executive Director European Pensions, Robeco

Marcello Matranga Sales Director, Robeco Italy

Junwei Hafner-Cai Co-Portfolio Manager RobecoSAM Global Gender Equality Impact Equities Strategy

enables us to engage with pension funds and

period, the corporate governance structure and

“The fund outperformed the

“Many Robeco clients invest directly

“After having set up the shop in

“Last year, we launched the

What progress is being made in terms of the Robeco Group ‘accelerate growth’ strategy?

insurance companies directly. This year we will open

the activities within the holding company will

benchmark in 2015 mostly due to

or indirectly for their own pensions

Milan, the team has been tirelessly

RobecoSAM Global Gender Equality

an office in Singapore, which will open new doors to

change substantially and I will no longer hold these

the ‘unloved’ sectors of the market,

or those of others. This means that

pursuing further asset growth, client

Impact Equities Strategy. Gender

institutional investors and also act as an additional

positions. I have been part of the Robeco Group

namely Materials, Energy and

it is important that Robeco keeps

and product diversification in Italy.

diversity & equality have a positive

Boeren: “We are continuing with this strategy and

base for our credits team.”

Management Board for almost twelve years and the

Industrials where we were able

abreast of developments in the

While moving from a retention stance

impact on corporate performance,

time is right to pursue a new challenge.

to identify dislocations between

world of pensions. And that we use

to a proactive one, we realized that

profits and ultimately the share

are right on track. The 2014-2018 strategy focuses on growth in three regions: the US, Europe and

“We will expand our European distribution by

the underlying fundamentals and

this knowledge to develop a vision

one of the main ways we will be

price. Our approach integrates

Asia. In these regions Robeco Group and ORIX

adding further resources to existing sales offices. In

Boeren thinks that the change the asset

valuations on an individual company

and to share it. Robeco wants to be

able to hit our growth targets will

gender criteria into our investment

already have a strong presence and foundations,

2015 we opened an office in the UK focusing on key

management industry is facing right now, will lead

basis. The fund continues to build

regarded as a thought leader on

be to develop more awareness for

decisions, helping us to identify

which can form the basis for further expansion in

account management, consultant relations and the

to a small number of truly global players. “And

a portfolio from the bottom up,

pensions and is already recognized

our fixed income capabilities. Italian

well-managed companies which will

order to enable clients to benefit from our world

UK institutional market. Last year we also opened

Robeco Group will be one of them. I’m absolutely

maintaining a flexible exposure

for its knowledge in this area. We are

investors have historically been more

drive positive long term returns. ” As

class investment capabilities wherever they are

an Italian office to further develop the Italian

confident of that. Despite the current challenges,

on a sector, region and market

often asked by pension funds and

comfortable with bond investments

a Co-Management team, the aim is

located.”

business and service existing clients. We expect to

Robeco Group is well positioned for this change. I

capitalization basis. It can select from

companies to give presentations at

and, thanks to our outstanding

to demonstrate that, in addition to

realize growth in Europe with our current product

have the utmost confidence in my successors; and

a universe of nearly 10,000 stocks,

their strategy sessions, or requested

product offering and further increase

our structured investment process

Can you explain more on the strategy’s aim to ‘foster growth in the US, invest in Asia and scale up in Europe’?

range, which varies from value equities, our high

that with them our teams and our clients will be in

which has enabled it to generate

to help make the transition from

in team and marketing resources, we

and in-depth expertise based on our

yield and credit suite of products, quant and factor

good hands. I know the company will be well looked

seven straight years gross-of-fee

a defined benefit to a defined

think that we are very well positioned

proprietary database of financially

capabilities, pension solutions and sustainability

after.”

performance that is better than or

contribution pension scheme using

to take advantage of this and grow

material ESG factors, diversity leads

Boeren: “We expect strong growth for Boston

solutions.”

in line with the benchmark for seven

our sustainable life cycle solutions.”

our footprint in the 3rd largest asset

to better results.”

Partners by focusing on its strength as a value

straight years.”

management industry in Europe.”

Performance Insights

2015

Pursue accelerated global growth and excellent results

This new structure will allow for talent to flourish and help Robeco Group to further build on its strong foundations

Robeco Group is in good shape with a solid financial performance and a long-term strategy. We are proud of Robeco Group’s contribution to ORIX as a financial services group which provides innovative products and services to its customers, says CEO Makoto Inoue.

Like last year, we will continue to see an uneven

We want asset management to become a strategic

economic development among countries, with

pillar of ORIX. Therefore we continue to execute

global trends such as prolonged of economic

Robeco Group’s global accelerated growth strategy.

stagnation in Europe, deterioration of resourceexporting economies due to sharp decline in oil

We believe the change in corporate structure will

prices, and slowing down of the Chinese economy in

help Robeco Group to reach these goals while

the Chinese government’s five-year plan.

serving the interests of clients in the best possible way. Robeco employs absolutely world class

In addition to China’s devaluation of the renminbi

investment talent. This new structure will allow this

last year, if the US continues its streak of interest

talent to flourish and help Robeco Group to further

rate hikes which it started in December, repatriation

build on its strong foundations.

of capital from emerging markets to the US will occur, resulting in impacts such as changing foreign

Robeco Group can count on the full support of

exchange rates and further increased volatility in

ORIX and I am convinced that together with the

the global market. Therefore, we have to conduct

staff at the subsidiaries Robeco Group will be able

our business with a great degree of caution.

to accelerate its growth ambitions globally while continuing to deliver great results for clients.

It is in this challenging environment that Robeco Group has to operate and has to execute its

Makoto Inoue

ambitious growth strategy for 2014 – 2018. But

CEO ORIX Group and member of the Supervisory

on all counts Robeco Group is outperforming in

Board of Robeco Group

terms of this strategy. We are proud of the financial results of Robeco Group, which makes an important contribution to the total revenue of ORIX and which Makoto Inoue, CEO ORIX Group

makes the asset management business a relevant part of ORIX in term of turn over and profits.

Performance Insights

2015

Assets under management EUR x billion

Net result EUR x million

Assets under management development â&#x20AC;&#x2DC;10-â&#x20AC;&#x2122;15

300

250

268 246

250

268 bln. 228

205 200

150

197

200

189 150

150

238

200

150

134

135 bln.

123 100

100

2014

2015

0 2011

2012

2013

2014

2015

Operating income EUR x million

Operating expenses EUR x million

FTEs male/female

1200

800

2000

1.052 959

692

700 629 600

776

800 680

Total 1245 Male 809 Female 436

726

500

600

482

Total 1266 Male 868 Female 398

500

200 200

2012

2013

2014

2015

16%

Equity Fixed Income/ Multi Market Other

The net cash inflow amounted to EUR 4.0 billion (2014: EUR 6.2 billion). In geographical terms, flows were different for different markets. On a net basis, bond funds experienced outflows, while equity funds posted net inflows, especially in US equity and quantitative strategies, for example.

47% 53%

Institutional Wholesale/Retail

Assets under management by client type

At group level, 74% (2014: 79%) of the portfolios outperformed compared to the relevant benchmark over a three-year period. For 2015 this figure is 67% (2014: 52%).

100

2011

67% 17%

In 2015 Robeco Group generated net profits of EUR 238 million: a record high and an improvement of 4% compared to the previous year. This improved result due to an increase in recuring management-fee income, caused by the very positive market appreciation during the first half of the year. The operating result over the year was EUR 360 million, an improvement of EUR 30 million.

1000

300

Netherlands Other Europe US Rest of World

481

400

Roland Toppen (CFO): 2015 turned out to be another great year for Robeco Group in terms of both assets under management and profitability. We ended the period with the highest end-of-year asset under management figure in our history: EUR 268 billion! The asset under management growth of EUR 22.1 billion (+9% compared to 2014) resulted in an all-time high for the seventh consecutive year. Of the assets under management 47% are institutional. This increase was driven by strong positive market appreciation, which provided our clients with attractive returns, and was supported by a net positive cash inflow. The investment result of EUR 18.6 billion was positively affected by a EUR 17.3 billion gain caused by US dollar appreciation.

Total 1218 Male 830 Female 388

30% 14% 50% 6%

Assets under management by asset class

2015: Another record year for Robeco GroUp

1500

572

Assets under management by region

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

Assets under management at an all-time high for the seventh consecutive year | Roland Toppen

1000

10 27 21 13 3 3 72 73 5 2 27 12 268

AuM as of 31-12-2015

2013

Net cash flow 2010 - 2015

2012

Investment results 2010 - 2015

2011

+34 bln.

AuM as of 01-01-2010

+99 bln.

Assets under management by investment capability

0 2011

2012

2013

2014

2015

2013

2014

2015

Unaudited numbers | Source: Robeco

Financials

Performance Insights

2015

Highlights Corporate Responsibility Report 2015 Our corporate responsibility report focuses on those

– In 2015, Robeco Group won the ‘Asset

Achievements we can build on

performance is computed annually and is

Robeco Group activities that impact the world

Management Firm >100 billion’ award at the

awarded to clients whose 12-quarter rolling

around us, our clients and other stakeholders in

Funds Europe 2015 Awards. According to the jury,

average compares favorably to the top quartile

terms of the environmental, social and governance

Robeco Group won the award because: “The

of the NQR benchmark for the previous year.

aspects involved. For the Group, these are

Netherlands-based asset manager is a company

– clearly – our results and performance in the field

on the up.”

– In 2015, the average spend on development per

of integrating sustainability into our investment.

employee was EUR 1,700.

Moreover, we are accountable for our way of

– General employee engagement for Robeco and

Frédéric Lejeune Country Manager, Robeco France

Maureen Schlejen Head Institutional sales NL & Nordics, Robeco

Mattias Narr Engagement Specialist, RobecoSAM

Bart Thijssen Market Intelligence Specialist, Robeco

continuing to apply a client-centered approach

RobecoSAM in 2015 was rated 7.5 compared to

in 2015. All our strategies have our clients’ best

7.3 in 2014. The benchmark for financial services

for the Metrixlab Website of the year 2015 and

interests at heart. Investment teams work closely

is currently 7.3. These high scores earned Robeco

won the National Contact Center Award (NCCA)

“After winning a US SRI equity mandate

“Our clients have been facing a

“My most notable achievement

“In 2015, in a joint effort with

together and share knowledge and ideas, so that

the title ‘Best Employer 2015’ in the financial

online customer-service award for best online

in 2014, last year the Paris team was

complex regulatory landscape since

has been to push electric utilities

numerous departments within

they are fully equipped to meet our clients’ needs.

services category in the Netherlands.

customer service.

able to reiterate this important success.

the onset of the financial crisis. This

towards decarbonization. In 2015

Robeco, our team completed a huge

In a joint effort with our colleagues

creates greater compliance burdens,

we started to engage with the

data enrichment project for our

– Robeco Retail’s online platform was nominated

This can only succeed with the right people on your staff to put the ambition into practice.

from RobecoSAM and Robeco Hong

increases operational complexity and

electric utilities sector in Europe,

Customer Relationship Management

Harbor Capital Advisors a 5-star rating in Q4

Kong, we were selected to manage a

makes it more difficult to meet new

thus prioritizing engagement over

system. This has improved our overall

Here are some of the highlights. The full report can

2015 for the quality of their call-center service

PACIFIC SRI equity mandate worth EUR

reporting requirements. This results

divestment as means of addressing

knowledge on clients and client

be downloaded from Robeco.com

and processing operations. NQR’s 5-star

200 million.

in rising costs for pension funds, more

carbon risk in our portfolios. During

segments, and given us a better understanding of their needs.

– The National Quality Review (NQR) gave

Sustainability investing in figures (total AuM EUR 268 billion | Year end, in billion EUR) 2015 Assets in sustainability theme funds

2.7

Employee satisfaction

2015

2014

2.8

Assets for which ESG integration has been implemented

76.7

(1)

82.6

General satisfaction

7.5

7.3

Assets under engagement

218.1

65.6

Number of respondents

819

791

45.0

41.4

% of total surveys sent out

Assets under voting

responsibility and accountability

our engagement we encourage the

Robeco France has now crossed the EUR

at board level and requires more

adoption of ambitious environmental

4 billion threshold in terms of assets

professional boards and investment

strategies; operational excellence

Improved client and market data

under management for the first time.

committees. It also raises the bar for

in thermal generation, business

has given us a solid foundation

If we are already one of the leading

us; we need to be more transparent

model innovation, and public policy

to implement a new business

foreign asset managers in France, I’m

in our services and this requires more

transparency. I am proud to have been

intelligence tool in 2016 that will

quite optimistic that we can go far

analytics and risk management skills.

part of this significant development in

enable us to better signal market and

beyond this!”

We had anticipated this trend and so

combatting climate change.”

client trends going forward.”

have further developed our clientDecrease due to stricter methodology used for calculating assets in which ESG criteria are incorporated.

(1)

centric sales culture.”

Performance Insights

HARBOR CAPITAL ADVISORS | is investment advisor to a family of mutual funds, utilizing the ‘manager of managers’ approach, headquartered in Chicago.

What sort of year was 2015 for Harbor Capital Advisors? David Van Hooser, Chairman, President and Trustee, takes us on a tour of what happened last year and what we can expect in 2016. “In many ways it was a very normal year.”

2015

We always encourage investors to focus on the long term We had some truly outstanding performances at Harbor Funds in 2015. Harbor Capital Appreciation, our large cap growth fund, did exceptionally well and the portfolio managers were nominated for Morningstar’s ‘Domestic-Stock Fund Manager of the Year’ award in January 2016 and Sig Segalas, who has been a portfolio manager on the fund since 1990 was named Institutional Investor Money Manager of the Year. At the other end of the spectrum, Harbor International Fund had a disappointing year and some investors responded by reducing their investments in the fund. In many ways, it was a very normal year.

The fact that the markets may be flat or go down this year should not be a surprise

In any given year, some strategies perform well and some do not. Overall, the fact that markets as a whole generally moved sideways in 2015 made it a less than satisfying year for many investors.

generally been very good years for many US investors. So the fact that the markets may be more or less flat or go down this year should not be a surprise, even

In the first few weeks of 2016, markets moved sharply lower. Markets have

though no one can ever predict how the markets will move in any given year.

improved generally following the slow start, but no one knows how the year will end. Still, investors are uncertain. China shows signs of slowing growth,

A year always seems like a long period of time, but in the investment world, it’s

oil prices have improved recently yet like most other commodities prices remain

actually very short. We always encourage investors to focus on the long term,

weak, the Federal Reserve took a first small step towards normalizing (raising)

which is defined as a period of five to ten years or even longer. Markets cannot be

interest rates in late 2015 and US corporate earnings appear to have plateaued.

predicted from year to year so having a diversified portfolio and focusing on the

Following the predominantly sideways movement in 2015, these developments

long term is a beneficial approach to help investors meet their financial goals.

make many investors uncomfortable about the outlook for 2016. As for Harbor Capital Advisors, we sponsored a new fund in 2015, Harbor

David G. Van Hooser CEO HCA

No surprise markets may be flat or go down

Diversified International All Cap Fund, with portfolio management provided

From a US perspective, using the well-known S&P 500, the Total Return Index

by Marathon Asset Management in London. Early in 2016, we sponsored the

where dividends are reinvested as a market reference, investors have had a very

Harbor International Small Cap Fund, with portfolio management by Barings,

good long-term run, experiencing only one down year since 2002. Admittedly,

also out of London. We think both of these funds have good potential for the

that one down year, 2008, was a big down year, yet the last 13 years have

long term.

Performance Insights

2015

We’ve moved! ROBECO | is a full range asset manager with investment offices in Rotterdam, Hong Kong en Zug.

FIRST became Robeco’s new Rotterdam office in May 2016. Monique Donga - Head Group Human Resources and Internal Communications and Ton van Gaalen - Manager GIS Delivery Infrastructure - tell us about the ‘behavior’ and ‘bytes’ elements of the FIRST concept and the wow factor associated with putting employees and clients first.

This is an inspiring building to work in An inspiring and productive office environment

‘What facilities are available?’ ‘Do they meet my

network cables have been installed in the building

with state-of-art facilities where employees enjoy

requirements?’ These are all important questions,

itself. The meeting rooms have been equipped

working; a place that allows them to do their work

and the move to FIRST provides great answers to

with a Microsoft Surface Hub – a large, wall-

efficiently and effectively and helps them to realize

all of them. It means you can find a workplace that

mounted tablet – and door panel displays for room

the best results for clients. This is what Robeco aims

suits the specific assignment you are working on at

reservation. We have installed 92 new servers, and a

to provide with its new office in the FIRST building in

that particular time, allowing you to work effectively

new data center has been set up in Hong Kong. Our

the center of Rotterdam.

in your own way.”

call center uses an entirely new telephony solution, and the old MyDesktop environment for working

What initially comes to mind when you think about FIRST?

Has the move to FIRST affected the way staff collaborate?

remotely has been replaced.”

Ton: “I’m convinced that the combination of a

Monique: “We want employees to connect,

Have clients noticed any difference?

state-of-the-art office building and an entirely new

collaborate and share knowledge in an environment

Ton: “I’m sure they will, once the dust has settled.

IT workspace will boost productivity. The building’s

that challenges them to deliver their best and the

Our new infrastructure will ensure client-related

design alone changes the way people work:

interior has been designed to encourage this. The

activities are executed more smoothly, resulting in

unassigned seating in a mobile phone-, laptop-

building has wide staircases, which are great for

improved cost effectiveness and reduced lead times.

based office environment. When employees open

bringing people together in a natural way. The floors

I’m convinced this will improve our competitive

their laptop and use their fingerprints to log on,

are spacious and open, with facilities concentrated

edge.”

they have access to Robeco’s full-featured enterprise

in certain areas, which will make people get up and

network wherever they are. To meet our ambitious

move around. FIRST gives us more flexibility in the

How are people reacting to the move?

growth targets, the new IT workspace is also being

way we work (activity based working). Employees

Monique: “Robecians are proud of their company.

rolled out to Robeco’s international sales offices

enjoy working in an office environment that allows

It’s great to be able to share this with others. Of

and to RobecoSAM. This will significantly improve

them to do their work efficiently and effectively and

course, it is quite a change for some. After years of

the way people can work and collaborate in all

helps them to realize the best results for our clients.

some reservations and even resistance to these sort

our offices, optimize the identity of and access

It is fun to meet up and connect with others in this

of changes and the new way of working, there has

to management processes and help us meet

cool and marvelously sustainable building.”

been a turnaround. Employees have become more

What impact has the move to FIRST had on Robeco’s staff? Ton van Gaalen, Manager GIS Delivery Infrastructure Robeco Monique Donga, Head Group Human Resources and Internal Communications Robeco

engaged and their views of the new work place now

compliance requirements more efficiently.”

Could you give us some idea of the work involved?

tend to be ‘that’s cool’, ‘it looks great’ and ‘wow, that is innovative’. There is a positive vibe amongst

Ton: “To give you some idea, all Rotterdam

the people working in FIRST. They are open to

Monique: “When people ask me what I do, I tell

personnel have received a new iPhone and laptop.

change and aware of the opportunities that it offers.

them that I am responsible for ensuring that

Our global data network underwent a major

We’re confident that it will prove to be a successful

Robeco’s staff can really flourish, which in turn

upgrade. FIRST is connected to our data centers

step and that we will all reap the benefits.”

benefits the organization. ‘Why do I go to the office?’

with new optical fiber links, and 125 kilometers of

Performance Insights

ROBECO | is a full range asset manager with investment offices in Rotterdam, Hong Kong en Zug.

2015

The low-vol factor awakens

After several good years for investors, 2015 was quite a roller-coaster, but

can be brought down to a level similar to that of many actively managed bond

generally returns were not all that exciting. Under these conditions, the low-

portfolios. Therefore, factors are always used in combination. “Since factors

vol factor has proved its worth. Patrick Houweling: “While low vol can be

each capture different effects, a combined multi-factor portfolio will halve the

expected to lag in strong market environments, it is most visible in declining

tracking error compared to strategies where only individual factors are used.”

and turbulent markets when it offers downside protection. Instead of low vol,

Furthermore, a single-factor portfolio can implicitly go against one or more

we actually prefer to use the term low risk when dealing with factor investing in

other factors, reducing investment returns.

credits because risk is a much broader concept than volatility.” Last year also saw institutional investors probing for more information on factor investing in credits, often after successfully implementing the strategy

Apart from many other highlights, 2015 saw the ‘awakening’ of the low-vol factor, says Patrick Houweling – Portfolio Manager & Quantitative Researcher at Robeco – with a playful reference to Star Wars The Force Awakens. Patrick reflects on 2015 and looks ahead to what we can expect.

on the equity side. Factor investing advocates looking beyond traditional asset classifications and allocating to factor premiums such as Size, Value, Momentum and Low Vol. Robeco’s factor-investing strategies are driven by proprietary quantitative models that use enhanced factor definitions to

Why wouldn’t factor investing work for credits?

improve Sharpe ratios beyond their academic definitions.

‘Why wouldn’t it work for credits?’ Following the publication of the academic research paper on factor investing in October 2014, written by Patrick Houweling and Jeroen van Zundert, clients contacted the team with numerous questions which led to an update

Fundamental check

in December 2015. “Initial conversations often boil down to the same issues:

Robeco’s investment process for factor strategies in the credit market combines

‘Factor investing has been successfully applied to equity markets, but why

the signals of the quant model with a fundamental check by Robeco’s credit

would it work for credits?’ My immediate answer is ‘Why wouldn’t it work for

analysts. They identify additional risks that are difficult for the model to capture,

credits?’ Factor investing benefits from behavioral biases such as herding and

such as ESG-related risks, and distorting events like mergers and acquisitions.

overconfidence, which are obviously not specific to equity investors alone. Our

“Between 90 and 95% of the process is quant-based, but our analysts provide

research and investment experience prove that applying factors can contribute

valuable input to the portfolio managers, who decide whether or not we are

to the investment performance of credit portfolios.”

dealing with a sound investment from a risk perspective.” Recently, two new members joined the team – Mark Whirdy, Portfolio Manager & Quantitative

Other frequently asked questions such as ‘How do we define factors for fixed

Researcher, and Frederik Muskens, Quantitative Researcher – to help us cope

income?’ and ‘What happens in terms of transaction costs or limited liquidity?’

with the anticipated growth in 2016. Patrick: “2015 has been a good year to

– typical issues with credits – are also addressed in the research paper.

share knowledge with interested clients and new mandates are expected to follow in 2016.”

Always used in combination Patrick Houweling Portfolio Manager & Quantitative Researcher Robeco

In June 2015 the Robeco Global Multi-Factor Credits Fund was launched to

External recognition

offer investors a balanced exposure to the Low Risk, value, Momentum and

Robeco Global Multi-Factor Credits Fund was awarded the FERI Fund Innovation

Size factors. By combining factors in a multi-factor portfolio, the tracking error

Award (2015).

Performance Insights

ROBECO | is a full range asset manager with investment offices in Rotterdam, Hong Kong en Zug.

Portfolio Manager Sander Bus takes a look at the high yield bond category and explains how Robeco High Yield Bonds was able to outperform the benchmark in 2015 in a market under pressure. “The total return outlook is very positive for investors who are able to withstand day-to-day volatility.”

2015

Volatility brings opportunities for high yield bonds

We are sticking to our cautious approach

High yield bond excess returns were negative in 2015. The universe posted a

No worries about contagion

negative return for the first time since 2008. High yield started last year on a

Looking at the US energy sector, worried investors have asked us about our view

positive note – with improving economic conditions in Europe as well as the

on the risk of contagion in other sectors. We expect a lot - 25 to 50% - of defaults

United States and an ongoing search for yield. By mid-year however, the mood

in 2016 and 2017 to occur in the energy sector, but we expect the spillover

had turned decisively negative. China’s economic slowdown led to a sharp fall in

effect to other sectors to be limited. The biggest driver for defaults in the energy

commodity prices and volatility in risk assets worldwide increased. Commodity

sector is the low oil price. But this plays a less significant role in other sectors.

related sectors and highly leveraged companies incurred heavy losses. US high

For example, consumer-related sectors can actually benefit because consumer

yield was the big underperformer, as it has far more exposure to those segments

purchasing power increases as a result of low inflation and energy costs.

than European high yield. As we have seen since the start of 2016, the high yield bond asset class as a whole

Avoid highly leveraged companies

can provide investors with solid returns if they take a cautious and focused

Robeco High Yield Bonds realized flat returns but outperformed its benchmark

approach. We have actively been reducing our underweights in the energy

by 4.53%. Our strong relative performance was the result of the fund’s tilt

and metals & mining sectors by buying into companies that we assess as likely

towards higher quality paper and underweights in the energy and metals &

survivors but that have been dragged down by weak sector trends. It is a case

mining sectors. We generally underweight CCC-rated bonds, because we believe

of finding those companies that are sufficiently capitalized to ride out the

that this risky segment of the high yield market structurally offers insufficient

storm and identifying names that offer good relative value. We can rely on our

compensation for the level of risk incurred. Our regional preference for

excellent bottom-up credit research process that has proven itself over the years.

European over US high yield bonds also played a role with a top-down allocation to the more attractive European high yield market which looked better in terms

The total return outlook is very positive for investors who are able to withstand

of quality and technicals. We had an underweight exposure to the energy and

day-to-day volatility, which we believe high yield investors should be able to do

metals & mining sectors, as well as to US telecom, pharma and technology.

anyway. It’s a long-term market, and year-to-date returns so far (as of April 2016) look promising for the remainder of 2016.

For 2016 we are sticking to our cautious, long-term fundamental approach and the resulting quality bias where we underweight those companies with a CCC Sander Bus Portfolio Manager High Yield Bonds Robeco

credit rating and overweight high-quality issuers with ratings of B and above.

Performance Insights

ROBECO | is a full range asset manager with investment offices in Rotterdam, Hong Kong en Zug.

“With ESG being such a core part of Robeco’s DNA, I definitely feel we can play an important role.” Stephen Dennis – Managing Director for Australia & New Zealand – outlines the trends emerging in the region and how Robeco’s global reach is helping Australians prepare for retirement with confidence.

2015

Playing to our strengths in Australia & New Zealand How would you describe Robeco’s role in the Australian & New Zealand market?

“The other trend we are observing is the growing appetite for investments of

“This region is an increasingly dynamic area. Much of our focus here is on

Institutions, consultants, advisers and consumers are all increasingly interested

pension funds (known locally as ‘super funds’). Australia in particular has a

in responsible investments, and as this is such a key element of Robeco’s DNA, I

well-entrenched retirement savings system, combining varying degrees of

definitely feel we can play an important role here.”

a responsible environmental, social and corporate governance (ESG) nature.

compulsion and encouragement to save. It is already a multi-trillion dollar pool, and is only set to grow.” “Since establishing our presence in the region, we’ve launched two products well-suited to the market here – the Robeco Emerging Conservative Equity Fund and the Robeco BP Global Premium Equities Fund – and we’re working with pension funds and their intermediaries to better understand clients’ needs and help raise awareness of the Robeco philosophy.”

We can play an important role here in responsible investments

What trends do you observe? reforms have put a strong downward pressure on fees, giving rise to more

How is 2016 shaping up for the Australian & New Zealand region?

passive investments.”

“With so many geopolitical tensions still playing out globally, we are of course

“Australia’s retirement system is highly regulated and always evolving. Certain

prepared for another year of market uncertainty, and I expect to see further “Having said that, investor education is strong here and there is an undeniable

consequences of the legislative reforms unfolding here.”

awakening in terms of consumer power. A growing number of individuals want

Stephen Dennis Managing Director Robeco Australia and New Zealand

more choice – more control over their money. They also want superior long-term

“But challenges aside, this region has so much potential to grow; it’s an exciting

returns. This means that in order to remain competitive and relevant, pension

time. We are committed to helping our existing and prospective clients in their

funds and intermediaries need to be able to offer good quality active options

quest for returns in any and all market conditions. I want more and more people

too. It’s very pleasing to be building a track record here as a manager that can

to become aware of the breadth and quality of our investment research and

provide alpha without unnecessary volatility, as obviously minimizing volatility is

management, and to see the philosophies and disciplines that make Robeco

an objective close to many people’s hearts when it comes to retirement savings.”

who we are.”

Performance Insights

RobecoSAM | is the investment specialist focusing exclusively on Sustainability Investing, headquarted in Zurich.

In 2016 RobecoSAM commences its third decade as an investment specialist focused exclusively on Sustainability Investing. CEO Michael Baldinger reflects on the evolution of SI to mainstream status and RobecoSAM’s role in promoting sound business practices and innovation.

2015

Sustainability Investing is the new normal

The modern definition of Sustainability Investing (SI) is a different investment discipline to its older cousins, those that grew out of value systems and tend still to focus on exclusionary practices. SI simply refers to the assessment of a prospective investment beyond its company’s current financial status that looks

Sustainable investing has extraordinary power

for factors providing insight into the longevity of its business operations and ultimately its profits. SI is neither ideological nor esoteric. It is about measurable environmental, social and governance (ESG) factors that make a material difference to long-

outperformance of companies operating with sustainable business practices

term performance. Managed poorly, these ESG factors can expose a business

over their peers on the stock market in the last two decades.

to numerous risks including cost inefficiency, brand damage and litigation. Managed well and with the constant pursuit of improvement, they serve not

With that proven track record, it follows suit that there has been enormous

only to mitigate risk, but also to foster innovation.

growth in the share of global assets being managed sustainably. In fact this has risen over 60% in recent years and now comprises a third of all professionally

SI also has the extraordinary power of being able to change the world we live in

managed assets. Two thirds of the assets are managed in Europe, the region

for the better, while generating financial returns for our clients. It encompasses

which historically embraced the concept the most. But the US shows the

investment in businesses that provide solutions to major environmental

strongest growth rate with 76%. SI has truly entered the realms of mainstream

challenges and make a positive impact on social issues. Those businesses that

investing.

have a positive impact have the best chance of standing the test of time in an ever-changing world, while companies with a negative impact on the planet or

RobecoSAM’s pioneering ways

society may have difficulty finding new capital.

RobecoSAM has always been a pioneer in the field of SI, bringing the smart ESG methodology and impact investing via listed equities to market. Our

The good news for our clients is that RobecoSAM is able to monitor and measure

Corporate Sustainability Assessment (CSA) questionnaire provides us access to

the effect of an investment, giving clients unprecedented visibility on its tangible

comprehensive information relating to a company’s sustainable framework.

impact.

It allows us to make better informed investment decisions in our asset management business, and forms the basis for our Sustainability Yearbook (a

SI goes mainstream

compendium of the companies leading their particular industry) and the Dow

Recent years have seen growing recognition for the role of SI in successful long-

Jones Sustainability Indices (DJSI). Both the indices and the Yearbook have

term investing. Considerations like how a company minimizes its environmental

launched the race for continuous improvement, stimulating companies to learn

impact, how its people approach their supply chain and workforce, and how

how to improve their own sustainability practices, and constantly raising the bar

they manage issues like shareholder rights and executive pay, may historically

in sustainability excellence across all industries.

have been separated from traditional financial analysis, categorized as niche or only of interest to those wishing to be ‘virtuous’ investors.

We will continue to invest in businesses that address the planet’s big challenges because of course out of challenges come opportunities, and we are excited

Michael Baldinger CEO RobecoSAM

But far from being separate to financial factors, ESG factors are directly linked

by new developments that help our clients see the measurable impact their

to a company’s future financial success. The evidence of that can be seen in the

investment makes on solving key environmental and social challenges.

Performance Insights

BOSTON PARTNERS | is an investment manager with distinctive investment capabilities. Value equities is its core offering. The company is headquartered in Boston.

How did Boston Partners’ value strategy fare last year? Jay Feeney, Co-CEO & CIO, talks about the accomplishments achieved against the backdrop of a challenging global market environment. “We too were surprised by the sharp, swift market decline that started 2016.”

2015

We face a challenging environment

The only reason clients hire us is to help them meet their investment return objectives

Looking ahead, what are your expectations for 2016? “Our expectations for 2016 are for the continuation of this challenging

While we are on the subject of net new cash inflow, can you give us some more information on this?

environment, as the end of QE, earnings pressure from a rising dollar, and

“Positive cash flow came from all three of our key client channels: US Institutional,

the ripple effect of lower oil prices on the global economy all suggest that

International and Intermediary. For the year, Boston Partners attracted a

investment returns will likely be muted this year. Nevertheless, we too were

considerable amount of net new cash flow. Rising assets under management, in

surprised by the sharp, swift market decline that started 2016. While it appears

turn, allowed us to surpass our budgeted revenue and EBIT margin for the year.

that significant pessimism prevails across most financial markets, our base case

Importantly, we also continued to make progress in developing new extensions

scenario does not predict a US recession. In fact, the current depressed stock

to our investment strategy. In March 2015, we introduced an Emerging Market

prices represent an improving investment opportunity, and we now see the

Long Short fund to augment our existing line up of global long-short liquid

stage being set for better prospective equity returns in general, and for value

alternative funds, and in December we began offering the strategy in a mutual

strategies targeting the energy and financials sectors in particular.”

fund vehicle. All of these accomplishments were achieved against the backdrop of a challenging global market environment. ”

What will be your investment approach? Will it be different? tested investment approach emphasizing stock selection within a framework

How did clients react to the market turmoil and what do you tell them?

of superior valuation, fundamental quality and business momentum. This

“Our clients hire us for one reason: to help them meet their investment return

approach has produced favorable compound investment returns over a range

objectives by filling a specific role within their global asset allocation framework.

of market environments for over 30 years.”

Boston Partners has a simple mission: to manufacture basis points through the

“Irrespective of market developments in 2016, we will continue to apply a time-

strict application and execution of the philosophy and process it articulated to the

Jay Feeney Co-CEO & CIO Boston Partners

What kind of year was 2015 for Boston Partners?

client at the onset of the sales process. Clients do not like unpleasant surprises, so

“All in all, I would characterize 2015 as a ‘good’ to ‘better than good’ year.

we try to minimize the chance of disappointment through ‘truth in labeling’ – we

The most important metric to measure the health of our business is

tell the client what we aim to do, and then we do it. We cannot guarantee great

investment performance. On that score, 2015 continued a favorable multi-

performance. In fact, there is no such thing as ‘consistent performance’. But we

year trend in that most of our strategies meaningfully outperformed their

can guarantee clients that we will adhere to the investment approach they have

benchmarks. Good performance, in turn, enabled us to continue to attract

‘bought’ from us.”

positive net new cash inflows into many of our strategies.”

Performance Insights

TRANSTREND | is a managed futures hedge-fund manager focusing exclusively on systematic trading strategies, based in Rotterdam.

2015

Eye on the price, eye on the prize

Transtrend’s managed futures program, the Diversified Trend Program (DTP), seeks out opportunities resulting from price movements across a broad range of underlying investments – including single stocks, indices, bonds, interest rates, currencies and commodities such as metal, agricultural and energy products.

We have immediate access to diversification

“Instead of making forecasts on markets or prices, we specialize in identifying price trends – as our name suggests. We collect quantitative data on price behavior and apply our systematic trading strategies to these patterns,” explains Transtrend Managing Director, Harold de Boer. “It may be possible to anticipate some drivers of market movements, but others are a bit more slippery. Despite this, opportunities can be found through the disciplined identification of price

Transtrend Managing Director, Harold de Boer, shares his thoughts on what constitutes smart investing, and his focus going forward. “Investors tend to be overly optimistic when it comes to the liquidity of their investments.”

trends as they happen”.

misconception once again last year on 24 August (‘Black Monday’), when for a short period of time exchange-traded funds (widely regarded as liquid) were

Strapped in for a bumpy ride

being sold at prices more than 40% below their previous day’s value.”

DTP trades on centralized exchanges as well as in some over-the-counter securities in approximately 30 countries. “We have immediate access to

Not being a victim of price movements

diversification on several levels.” By using instruments such as futures and

De Boer warns people to be prepared for the reoccurrence of such liquidity

forwards, DTP can take positions irrespective of the direction in which prices are

holes in the period ahead. “Regulation stimulates the use of liquid investment

moving, enabling investors to take advantage of both rising and falling markets.

products, but not the liquidity of markets. Of course, we can’t blame regulation. Ultimately, it is us – all the market participants – who are responsible for well-

Investors in traditional asset classes worldwide once again had to strap

functioning stable markets. Every price movement is the result of us buying or

themselves in for a bumpy ride in 2015. In a year dominated by issues such as

selling.”

the Chinese economic slowdown and stock market meltdown, slumping oil prices, the ongoing Greek debt crisis, geopolitical tensions, and central bank

With the conviction that stable markets require active investors, Harold is quick

policies, ‘volatility’ became something of a buzzword. Now investors have given

to point out the key misconception around active and passive investing. “Being

up hoping that volatility will go away and have started looking for innovative

active doesn’t just mean trading. Crucially, it can also mean not acting if the

ways to manage its presence. Increasingly, smart investors are looking to include

price isn’t right. It’s about being in full control of the strategy and not being a

a diversified range of alternative investments in their portfolio. “Alternatives are

victim of price movements.”

a great way to complement a traditional investment portfolio,” says De Boer. Transtrend is enjoying a good start to 2016. Looking ahead, De Boer says

Harold de Boer Managing Director Transtrend

During periods of market instability, it is natural for investors to take comfort

Transtrend remains committed to educating and communicating with clients,

if their investment has some degree of liquidity. However, De Boer indicates

and maintaining excellence in research. With regard to global issues, he singles

that investors tend to be overly optimistic when it comes to the liquidity of their

out the forces of nature as a driver of market movements that should not be

investments, particularly during times of market volatility. “One can define an

underestimated. “In economic terms, we tend to refer to the environment as

investment product as ‘liquid’ if you are able to sell it whenever you want. But

an ‘externality’ but that term may in fact misrepresent the powerful effect that

no market participant will be prepared to buy these products without a huge

nature– especially the weather – can have on economic prosperity and the

discount when they are sold en masse. We witnessed the consequences of this

markets.”

Performance Insights

2015

India rising

A rising number of Indian investors use mutual funds

CANARA ROBECO | is the asset-management joint venture of Canara Bank and Robeco, based in Mumbai.

India is at a point where its structural advantages are being enhanced by a cyclical upturn with favorable demographics, falling inflation and a stable currency. Canara Robeco is positioned to benefit from these positive developments by expanding its asset management activities there. CEO Rajnish Narula gives an insight into India today.

Markets have been turbulent all over the world, especially those in emerging

Opportunities for growth

countries. However, India’s economy stands out with GDP growth of 7.3% in

At Canara Robeco our strategy has always been to focus on profitable growth,

2015 making it what Christine Lagarde referred to in Delhi last year as ‘the bright

something that is not a given in India as half of the asset management firms

spot in a cloudy global economy’. Going forward, the new government has

operate at a substantial loss. During the last year we have successfully leveraged

committed itself to attracting new investment to the country, has already made

synergies between the Canara bank channel and other third party distributors

it easier to do business and has also improved levels of corruption.

within a new sales structure.

A growing asset management market

India offers a number of interesting growth opportunities going forward, with its

The positive outlook for the Indian economy has also translated into growth in

young population, low debt and a savings rate of 30%. Mutual fund penetration

the Indian asset management industry. For the first time in almost a decade, the

is at a dismal 7% of GDP compared to over 90% in the US. The government is

number of investors using mutual funds to realize their investment goals is on the

also keen to increase mutual fund retail and pension penetration, to expand the

rise. Moreover, the level of knowledge and the mentality of Indian investors are

credit market and reduce volatility on the stock market.

changing. In the past, any downturn or volatility in the market was a reason for investors to sell, whereas now they see it as an opportunity to invest more. This

Canara Robeco has already positioned itself for growth by strengthening its

means that investors are moving away from a typical trading mentality towards

commercial reach, investing in its online infrastructure and opening new offices

a more long term view. This is good news for asset managers and investors – for

in three promising locations during the past year. The liberalization of the

investors it means they have a better chance of earning a good return on their

pension market offers a huge long-term opportunity for Canara Robeco given

investments, while asset managers can adopt more long term strategies.

the changes in social structure and falling fertility rates. The first unique pension proposition will hopefully be launched in the coming months, leveraging the

During the last three years in India I have seen more changes to the industry

pension expertise at Robeco Investment Solutions in a product structured for

than ever. Last year was no exception; there were major and sudden changes.

the Indian market. There are further expansion plans for 2016 on the back of the

Commission structures were relaxed, there were taxation amendments, changes

positive results for 2015, India is rising and Canara Robeco is rising with it!

to restrictions on credit exposure and in terms of opening up the pension system to mutual funds. It is very interesting to see how adaptable people are to change Rajnish Narula CEO Canara Robeco

both in our company and in India as a whole – most seem to be very used to sudden structural changes.

Performance Insights

Achievements we can build on

Martin Mlynár Managing Director, Corestone

Jacqueline D’Elfant Investor Relations officer, Transtrend

Robbert Vonk Head of Risk Analysis, Robeco

Wilma de Groot Portfolio Manager Quantitative Equities, Robeco

“Two things stand out for Investment

“Investor loyalty is not only a function

“2015 saw a lot of notable

“Based on the strong long-term track

Solutions: Firstly, we achieved

of meeting the investor’s return

achievements by the risk team: for

records of Robeco’s Core Quant equity

another year of outperformance

expectations but also depends on the

instance the development of an

strategies in developed and emerging

for our fiduciary clients, during a

level of satisfaction in terms of softer

active management monitoring

markets, we have now developed the

12-month period with tremendous

factors such as communication, the

framework and the introduction of

Asia-Pacific Active Quant strategy,

volatility. We are very proud that we

level of transparency and whether

a new counterparty risk monitoring

which was be launched in March

helped our clients achieve and even

clients feel that there is a genuine

tool. However, in this turbulent year,

2016. The fund is based on the same

exceed their goals.

interest in understanding their needs.

with fears of a Eurozone breakup and

successful multi-factor model that

Secondly, as part of the 2014-2018

Last year, it was very rewarding to see

a financial blowout in China, I’m most

we have been using since the early

group strategy, we laid the foundation

that the additional efforts undertaken

proud of how these situations were

nineties in our investment process.

for more mid-term business growth

to raise these softer elements to

dealt with from a risk perspective. The

This product is a combination of the

with the re-launch of the newly

a higher level were received very

Financial Crisis Committee convened

best of both worlds and can fulfill the

globally focused multi-asset products,

positively. Since financial decisions

frequently at short notice and took

investment requirements of clients

planned for later in 2016. We see the

often involve highly complex

direct measures. As an asset manager,

wanting to invest in this region.”

appeal of multi-asset growing even

situations and some uncertainty we

being able to respond swiftly and