Business Strategy and Outlook
BlackRock is at its core a passive investment shop. Through its iShares exchange-traded fund platform and institutional index fund offerings, the wide-moat firm sources two thirds of its managed assets (and close to half of annual revenue) from passive products. In an environment where retail-advised and institutional clients are expected to seek out providers of passive products, as well as active asset managers that have greater scale, established brands, solid long-term performance, and reasonable fees, it is apprehended that BlackRock is well-positioned. The biggest differentiators for the firm are its scale, ability to offer both passive and active products, greater focus on institutional investors, strong brands, and reasonable fees. It is alleged that the iShares ETF platform as well as technology that provides risk management and product/portfolio construction tools directly to end users, which makes them stickier in the long run, should allow BlackRock to generate higher and more stable levels of organic growth than its publicly traded peers the next five years.
With $10.010 trillion in total assets under management, or AUM, at the end of 2021, BlackRock is the largest asset managers in the world. Unlike many of its competitors, the firm is currently generating solid organic growth with its operations, with its iShares platform, which is the leading domestic and global provider of ETFs, riding a secular trend toward passively managed products that began more than two decades ago. This has helped the company maintain above average levels of annual organic growth despite the increased size and scale of its operations. Although it is held the secular and cyclical headwinds to make AUM growth difficult for the U.S.-based asset managers over the next five to 10 years, it is still perceived BlackRock generating at least 3%-5% average annual organic AUM growth, driven by its commitment to passive investing, ESG strategies, and geographic expansion, with slightly higher levels of revenue growth on average and stable adjusted operating margins (range-bound between 46% and 48% of revenue) during 2022-26.
Financial Strength
BlackRock has been prudent with its use of debt, with debt/total capital averaging just over 15% annually the past 10 calendar years. The company entered 2022 with $6.6 billion in long-term debt, composed of $750 million of 3.375% notes due May 2022, $1 billion of 3.5% notes due March 2024, EUR 700 million of 1.25% notes due May 2025, and $700 million of 3.2% notes due March 2027, $1 billion of 3.25% notes due April 2029, $1 billion of 2.4% notes due April 2030, and $1.25 billion of 1.9% notes due May 2031. The company also has a $4.4 billion revolving credit facility (which expires in March 2026) but had no outstanding balances at the end of September 2021. Expecting the firm to fully repay the notes due this year, and assuming that BlackRock matches analyst’s earnings projections for 2022, the firm should enter next year with a debt/total capital ratio of less than 15%, debt/EBITDA (by our calculations) at 0.8 times, and interest coverage of more than 30 times. BlackRock has historically returned the bulk of its free cash flow to shareholders via share repurchases and dividends. That said, the firm did spend $693 million on two acquisitions in 2018, $1.3 billion on eFront in 2020, and $1.1 billion for Aperio Group in early 2021, so bolt-on deals look to be part of the mix in the near term. As for share repurchases, BlackRock expects to spend $375 million per quarter on share repurchases during 2022 but will increase its allocation to buybacks if shares trade at a significant discount to intrinsic value. The company spent $1.2 billion on share repurchases during 2021. BlackRock increased its quarterly dividend 18% to $4.88 per share early in 2022.
Bulls Say’s
- BlackRock is the largest asset manager in the world, with $10.010 trillion in AUM at the end of 2021 and clients in more than 100 countries.
- Product diversity and a heavier concentration in the institutional channel have traditionally provided BlackRock with a much more stable set of assets than its peers.
- BlackRock’s well-diversified product mix makes it fairly agnostic to shifts among asset classes and investment strategies, limiting the impact that market swings or withdrawals from individual asset classes or investment styles can have on its AUM.
Company Profile
BlackRock is the largest asset managers in the world, with $10.010 trillion in AUM at the end of 2021. Product mix is fairly diverse, with 53% of the firm’s managed assets in equity strategies, 28% in fixed income, 8% in multi-asset class, 8% in money market funds, and 3% in alternatives. Passive strategies account for around two thirds of long-term AUM, with the company’s iShares ETF platform maintaining a leading market share domestically and on a global basis. Product distribution is weighted more toward institutional clients, which by our calculations account for around 80% of AUM. BlackRock is also geographically diverse, with clients in more than 100 countries and more than one third of managed assets coming from investors domiciled outside the U.S. and Canada.
(Source: MorningStar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
BlackRock Advantage International Fund K seeks long-term capital appreciation, with a focus on risk management.Powered by innovation and technology driven investment process having exposures to international portfolio at a low cost.
Approach
The strategy aims to outperform the MSCI EAFE Index by combining bottom-up and top-down factors into a stock-selection model that uses roughly 40-60 signals that fall into three broad buckets: fundamentals, sentiment, and macro themes. Fundamental signals include factors such as management quality, valuation, and profitability; sentiment signals include analyst-, investor-, and broker-sentiment indicators; and macro signals include factors specific to industries, countries, and investment styles. The model weights the signals roughly evenly between the three buckets.
The team keeps a tight lid on the 375- to 715-stock portfolio’s tracking error (the volatility of its relative performance) by keeping its sector and industry weights within 4 percentage points of the index’s, generally. It mitigates stock-specific risk by typically keeping individual positions within 1-1.5 percentage points of the benchmark’s.
The systematic approach has a short time horizon of six to 12 months, which can lead to portfolio churn and higher trading costs. The strategy’s annual portfolio turnover has ranged from 106% to 247% during the past four years, much higher than the average foreign large-blend category peer’s 43%-51%.
Portfolio
In contrast to other foreign large-blend funds, the managers here allocate the strategy’s assets across positions that stick, deviated most at around 0.9 percentage points larger than the index’s share, as of November 2021. While the portfolio mostly invests in benchmark constituents, 5%-15% of assets are in stocks unique to the portfolio. Indeed, close to the MSCI EAFE Index’s weights. Its 1.1% stake in the world’s third-largest tobacco company, Japan Tobacco 10.1% of assets were invested across roughly 150 offbenchmark stocks such as Rexel SA RXL, Rightmove PLC RMV, and Électricité de France EDF.
The strategy typically has a bit more exposure to mid-cap stocks than does the index. As of November, the portfolio’s allocation to mid-caps stood at 15% versus the index’s 10%. As a result, the portfolio’s $41 billion average market cap was slightly below the index’s $47 billion.
Performance
The fund has earned mixed results since BlackRock’s Systematic Active Equity team took over in mid-2017. From July 1, 2017, through Dec. 31, 2021, the Institutional shares posted a 7.3% annualized return, which beat the foreign large-blend category’s 7.1% but trailed the MSCI EAFE Index’s 7.5%. Its risk-adjusted results don’t look much better.
The fund has fared worse than the index during severe market drawdowns but has outperformed the benchmark during prolonged rallies. The strategy’s calendar 2021 results were solid: The fund’s 13.0% gain beat the average peer’s 9.8% return as well as the index’s 11.3%. The portfolio benefited from good stock selections in the financial services and industrials sectors, namely Nordea Bank and Recruit Holdings, respectively.
Top 10 Holdings
About the fund
BlackRock Advantage International’s experienced and well-resourced research team plies a suitable quantitative approach and earns the strategy’s share classes Morningstar Analyst Ratings of Bronze or Neutral, depending on fees.
The team’s quant-driven approach has a lot of moving parts. It analyzes 40-60 signals that fall into three broad buckets–fundamentals, sentiment, and macro themes–that collectively consider both bottom-up and top-down factors. The strategy aims to outperform the MSCI EAFE Index by combining bottom-up and top-down factors into a stock-selection model that uses roughly 40-60 signals that fall into three broad buckets: fundamentals, sentiment, and macro themes. Fundamental signals include factors such as management quality, valuation, and profitability; sentiment signals include analyst-, investor-, and broker-sentiment indicators; and macro signals include factors specific to industries, countries, and investment styles. The model weights the signals roughly evenly between the three buckets. The team keeps a tight lid on the 375- to 715-stock portfolio’s tracking error (the volatility of its relative performance) by keeping its sector and industry weights within 4 percentage points of the index’s, generally. It mitigates stock-specific risk by typically keeping individual positions within 1-1.5 percentage points of the benchmark’s.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Business Strategy and Outlook
Wells Fargo remains in the middle of a multiyear rebuild. The bank is still under an asset cap imposed by the Federal Reserve, and it’s not seen as if, this restriction coming off in 2022. Wells Fargo has years of expense savings related projects ahead of it as the bank attempts to get its efficiency ratio back under 60%. It is also seen a multiyear journey of repositioning and investing in the firm’s existing franchises, including growing its capital markets wallet share, bringing an increased focus on cards, and revitalizing an advisory group that has lost advisors for years. It’s already started to be visible, that glimpses of the transition to offense from defence, as the bank released two new card products in 2021, the first attempt to do so that it can be thought of in years. However, it is anticipated the full transition to be a multiyear undertaking.
Despite the bank’s issues, Wells Fargo remains one of the top deposit gatherers in the U.S., with the third most deposits in the country behind JPMorgan Chase and Bank of America. Wells Fargo has one of the largest branch footprints in the U.S., excels in the middle-market commercial space, and has a large advisory network. It is apprehended this scale and the bank’s existing mix of franchises should provide the right foundation to eventually build out a decently performing bank. Well Fargo may not reach the types of returns and efficiency that peers like JPMorgan and Bank of America have achieved, but it is foreseen for Wells Fargo to remain larger than any other regional bank and stay competitive as such. It is also gaining confidence that CEO Charlie Scharf is guiding the bank in a new and positive direction.
With all anticipated asset sales completed (WFAM, corporate trust, international wealth, student lending), results should be less noisy. For now, the bank needs to consistently hit the expense targets it is laying out. Wells Fargo achieved them in 2021, and it is likely to do so again in 2022, achieving another year of net expense reductions while peers see expenses rise. Wells Fargo is also one of the most rate sensitive names under analysts’ coverage, which should help to offset some of the growth pressure from being unable to grow its balance sheet.
Financial Strength
It is perceived Wells Fargo is in sound financial health. Its common equity Tier 1 ratio stood at 11.4% as of December 2021. Given its history of prudent underwriting and current economic developments, it is alleged the bank arguably holds excess capital.
As of December 2021, the bank estimates its liquidity coverage ratio was 118%, in excess of the minimum of 100%. The bank’s supplementary leverage ratio was also 6.9%, well in excess of the minimum of 5%. Wells Fargo’s liabilities are prudently diversified, with over 70% of assets funded by deposits. Roughly $20 billion in preferred stock was outstanding as of the end of last year.
Wells had to cut its dividend during the height of the COVID-19 pandemic and is still in the process of bringing its dividend payout ratio back up. Over the long run, it is foreseen, the bank to return to a dividend payout ratio of roughly 30% through the cycle, a bit more conservative than what the bank has had in the past.
In the meantime, as Wells Fargo produces plenty of capital, it is projected high share repurchase levels, projecting that 70% of earnings will be used for repurchases over the next several years. Barring other opportunities, buybacks should be outsized for the bank for the time being.
Bulls Say’s
- Wells Fargo has some of the highest rate sensitivity among the big four U.S. banks, giving it an extra earnings boost as the next rate hike cycle occurs.
- Wells Fargo’s retail branch structure, advisory network, product offerings, and share in small and medium-size enterprises is difficult to duplicate, ensuring that the company’s competitive advantage is maintained.
- Wells Fargo hit its expense guidance in 2021, and the bank expects a net reduction in expenses in 2022 while peers are expected to see expenses increase. Wells should have several years left of net expense reductions.
Company Profile
Wells Fargo is one of the largest banks in the United States, with approximately $1.9 trillion in balance sheet assets. The company is split into four primary segments: consumer banking, commercial banking, corporate and investment banking, and wealth and investment management. It is almost entirely focused on the U.S.
(Source: MorningStar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Business Strategy and Outlook
PG&E emerged from bankruptcy on July 1, 2020, after 17 months of negotiating with 2017-18 Northern California fire victims, insurance companies, politicians, lawyers, and bondholders. Shareholders lost some $30 billion in settlements, fines, and costs, but PG&E exited with bondholders made whole and shareholders still in control.
PG&E will always face public and regulatory scrutiny as the largest utility in California. That scrutiny has escalated with the deadly wildfires and power outages. Legislative and regulatory changes during and since the bankruptcy have reduced PG&E’s financial risk, but the state’s inverse condemnation strict liability standard remains a concern. CEO Patti Poppe faces a tall task restoring PG&E’s reputation among customers, regulators, politicians, and investors
PG&E is well positioned to grow rapidly, given the investment needs to meet California’s aggressive energy and environmental policies. PG&E is set to invest $8 billion annually for the next five years, leading to 10% annual growth. After suspending its dividend in late 2017, PG&E should be positioned to reinstate it in 2024 based on the bankruptcy exit plan terms.
California’s core ratemaking regulation is highly constructive with usage-decoupled rates, forward-looking rate reviews, and allowed returns well above the industry average. California regulators are expected to support premium allowed returns to encourage energy infrastructure investment to support the state’s clean energy goals, including a carbon-free economy by 2045. This upside is partially offset by the uncertain future of PG&E’s natural gas business, which could shrink as California decarbonizes its economy.
The $59 billion bankruptcy was PG&E’s second in 20 years and likely its last. The bankruptcy exits terms all but guarantee a state takeover if PG&E has any safety or operational missteps. PG&E is still under court and regulatory supervision following the 2010 San Bruno gas pipeline explosion. The estimated fines and penalties from the San Bruno disaster and allegations of poor recordkeeping resulted in $3 billion of lost shareholder value.
Financial Strength
Following the bankruptcy restructuring, PG&E has substantially the same capital structure as it did enter bankruptcy with many of the same bondholders after issuing $38 billion of new or reinstated debt. PG&E’s $7.5 billion securitized debt issuance would eliminate $6 billion of temporary debt at the utility and further fortify its balance sheet. The post-bankruptcy equity ownership mix is much different. PG&E raised $5.8 billion of new common stock and equity units in late June 2020, representing about 30% ownership. Another $3.25 billion of new equity came from a group of large investment firms. The fire victims trust owned 22% and legacy shareholders retained about 26% ownership at the bankruptcy exit. The fire victims’ trust plans to sell its stake over time but had not sold any shares as of late 2021. It is expected that PG&E to maintain investment-grade credit ratings. Also, it is expected consolidated EBITDA/interest coverage will remain near 5 times on a normalized basis. State legislation in 2019 will help mitigate some of PG&E’s fire-related risks and support investment-grade credit ratings. Bankruptcy settlements with fire victims, insurance companies, and municipalities totalled $25.5 billion, of which about $19 billion was paid in cash upon exit. PG&E entered bankruptcy after a sharp stock price drop in late 2018 made new equity prohibitively expensive and the company was unable to maintain its 52% required equity capitalization. It is estimated that PG&E will invest up to $8 billion annually during the next few years. Tax benefits and regulatory asset recovery should eliminate any equity needs at least through 2023. It is also estimated that PG&E’s bankruptcy exit plan restricts it from paying a dividend until late 2023. Before PG&E cut its dividend in late 2017, the anticipated 6% annual dividend growth, in line with earnings growth. In May 2016, PG&E’s board approved the first dividend increase since the 2010 San Bruno gas pipeline explosion.
Bulls Say’s
- California’s core rate regulation is among the most constructive in the U.S. with usage-decoupled revenue, annual rate true-up adjustments, and forward-looking rate setting.
- Regulators continue to support the company’s investments in grid modernization, electric vehicles, and renewable energy to meet the state’s progressive energy policies.
- State legislation passed in August 2018 and mid-2019 should help limit shareholder losses if PG&E faces another round of wildfire liability.
Company Profile
PG&E is a holding company whose main subsidiary is Pacific Gas and Electric, a regulated utility operating in Central and Northern California that serves 5.3 million electricity customers and 4.4 million gas customers in 47 of the state’s 58 counties. PG&E operated under bankruptcy court supervision between January 2019 and June 2020. In 2004, PG&E sold its unregulated assets as part of an earlier post-bankruptcy reorganization.
(Source: MorningStar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Business Strategy and Outlook
Goldman Sachs is already making progress on the strategic plan that it laid out at the beginning of 2020. The company’s financial targets include a return on equity greater than 13% and a return on tangible equity greater than 14%. COVID-19 boosted revenue in 2020 and 2021 with high trading caused by economic uncertainty and companies issuing debt and equity to initially bolster capital and then later issuing debt and equity to take advantage of low interest rates and a strong stock market. Over the next five years, Morningstar analyst model Goldman Sachs achieving a normalized return on equity of around 12% and a return on tangible common equity of 13%.
Given Morningstar analyst forecast, Goldman Sachs should trade at about 1.4-times tangible book value. Its investment management business has become a priority. Assets under supervision exceeded $2.1 trillion at the end of 2020, while related investment management fees have exceeded 15% of net revenue compared with 11%-12% before 2008. Investment management is a relatively stable, higher return-on-capital business that is well suited to the current regulatory environment. Goldman has also built out a large virtual bank and had deposits of $260 billion at the end of 2020 compared with $39 billion in 2009. The deposit base and related net interest income will add more stability to the company’s revenue stream and balance sheet.
Normalizing Capital Markets Revenue Is a Theme for Goldman Sachs and Other Investment Banks
Goldman Sachs’ revenue remained relatively strong in the fourth quarter of 2021, but expenses, including compensation, seemed to be a bit higher than expected. The company reported net income to common shareholders of $3.8 billion, or $10.81 per diluted share, on $12.6 billion of net revenue. Net revenue of $12.6 billion in the fourth quarter was about 13% higher than the company’s 2020 quarterly average and 45% higher than its 2017 to 2019 quarterly average and cemented 2021 as a year of record revenue totaling $59 billion. Return on tangible equity was a very healthy 16.4% in the quarter and 24.3% for the year. With all that said, the fourth quarter’s revenue and net earnings were also the lowest of 2021 and determining a more normal level of revenue for the company will be primary theme for Goldman Sachs and other investment banks in 2022 and 2023. We don’t anticipate making a significant change to our $356 fair value estimate for narrow-moat Goldman Sachs.The recent record revenue at Goldman Sachs can roughly be broken down into two parts: more volatile capital markets-related and steadier client asset-based. The more capital markets-related revenue (such as underwriting, institutional trading, and equity investment gains) are over 70% of net revenue and contributed about $19 billion of the $23 billion of net revenue growth at the company since 2019, according to Morningstar analyst calculations.
Bulls Say
- More-stable investment management and net interest income could cause investors to reassess Goldman’s earnings quality and increase their willingness to pay a premium for it.
- The company has a record of success with higher-volume, lower-margin businesses, and this capability could prove useful in adapting to over-the-counter derivatives reform and changes in fixed-income trading.
- Several of the company’s primary U.S. and European competitors have been forced to restructure, which could give Goldman an opportunity to gain market share
Company Profile
The Goldman Sachs Group, Inc. is a leading global financial institution that delivers a broad range of financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Business Strategy and Outlook:
Wesfarmers hasn’t been immune to the recent rise in Australian coronavirus cases and the retail trading restrictions which were in effect in the first half of fiscal 2022. Subdued foot traffic to retail outlets has presented a challenging start to the fiscal second half but we expect recovery during the period. Although Wesfarmers’ discount department store segment, Kmart Group, is relatively small in relation to Bunnings, and only accounted for 20% of group operating profit in fiscal 2021, it is the chief culprit in the pronounced decline in first half fiscal 2022 NPAT.
Government mandated store closures and waning foot traffic heading into the key Christmas trading period weighed heavily on sales. While Kmart Group had shored up sufficient inventory in anticipation of shipping constraints, once stores reopened isolation policies resulted in staff shortages and empty shelves. The impact of operating deleverage on Kmart Group’s cost structure from the 10% decline in sales at the Kmart and Target chains was exacerbated by rising freight fees, as well as greater warehousing expenses to accommodate the elevated inventory levels.
Financial Strength:
The fair value estimate of Wesfarmers given by the analysts remain unchanged, driven by the recovery which is expected during the period which witnessed challenges earlier. The stock offers attractive dividend yields.
The conglomerate estimates profits declined by between 12% and 17% in the first half of fiscal 2022, versus the previous corresponding period. For the full fiscal year 2022, our underlying NPAT estimate of AUD 2.2 billion is unchanged- a decline in EPS of 10% versus fiscal 2021. And it is still expected that a strong 11% rebound in earning in fiscal 2023, driven by a post-pandemic recovery at Kmart Group and earnings growth at the core Bunnings business. From fiscal 2024, solid earnings growth in the mid-single digits are expected, underpinning our unchanged fair value estimate of AUD 39.50.
Company Profile:
Wesfarmers is Australia’s largest conglomerate. Its retail operations include the Bunnings hardware chain (number one in market share), discount department stores Kmart and Target (number one and three) and Officeworks in office supplies (number one). These activities account for the vast majority of group earnings before taxes, or EBT. Other operations include chemicals, fertilisers, industrial and medical gases, LPG production and distribution, and industrial and safety supplies. Management is focused on generating cash and creating shareholder wealth in the long term.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Process:
The strategy’s robust foundation, high repeatability, discipline, and consistent execution remain attractive features. The team’s relentless efforts to implement new elements to the process, these also make the approach more complex and have led to a slight change of portfolio characteristics, which is appreciated. This rules-based, quantitative process is built on extensive academic research demonstrating that investing in low-risk stocks leads to better risk-adjusted returns. After an initial liquidity filter, Robeco’s quant model ranks the 4,500-stock universe on a multidimensional risk factor (volatility, beta, and distress metrics), combined with value, quality, sentiment and momentum factors. In recent years, the team has introduced several enhancements to refine the model, including short-term momentum-driven signals that can adjust a stock’s ranking up or down by maximum 10 percentage points. This should prioritize buy decisions for stocks that rank high in the model and score well on short term signals, and vice versa. Since 2020 the team also allows liquid mega-caps to have a higher weight in the portfolio. Top-quintile stocks are typically included in an optimisation algorithm that considers liquidity, market cap, and 10-percentage-point country and sector limits relative to the MSCI World Index. A 200-300 stock portfolio is constructed with better ESG and carbon footprints than the index, while rebalancing takes place monthly, generating modest annual turnover of about 25%. Stocks are sold when ranking in the bottom 40% of the model.
Portfolio:
The defensive nature of the strategy currently translates into a higher allocation to low-beta and high yielding stocks in the consumer staples and communication services sectors, while industrials, energy and technology stocks are a large underweight. The valuation factors embedded in the model have steered the fund clear from MSCI ACWI index heavyweights Amazon.com AMZN, Tesla TSLA, and NVIDIA NVDA, while Microsoft MSFT and Apple AAPL were underweighted. Valuations make the fund lean towards European stocks while the U.S. stock market was an 8.8% underweight versus the index per November 2021. The model does like U.S. consumer defensives though, with larger positions for Proctor & Gamble PG, Walmart WMT, and Target TGT. The quant approach gives management wide latitude to invest across the market-cap spectrum, and the diversified 200- to 300-stock portfolio has long exhibited a small/mid-cap bias compared with the index.
People:
The team running this strategy is large, experienced, and stable. As such, it earns an Above Average People rating. This fund follows an entirely quant-based approach, an area where Robeco has extensive experience and expertise, and where it has invested heavily in human resources over the years. Robeco’s quant team runs various strategies: core quant equity, factor investing, and conservative equity, but there is significant interaction between them. The conservative equity team that runs this fund is led by Pim van Vliet, whose academic work has laid the foundation of the fund’s philosophy.
Performance:
This defensive strategy has generally offered good volatility reduction during turbulent markets. Robeco QI Global Conservative Equities’ C € share class absorbed 67% of the losses of the MSCI ACWI Index since inception. However, its results versus the MSCI ACWI Minimum Volatility Index have been less consistent. Disappointingly, it did not live up to its expectations in the corona-dominated markets of 2020, though the strategy’s failure can be explained by market dynamics in relation to the fund’s strategy. The portfolio lagged during the subsequent recovery that again benefited tech and ecommerce stocks, and while the value rally in the final quarter did help, cyclical value stocks that are not favoured here rallied the most.
(Source: Morningstar)
Price:
Analysts find it difficult to analyse expenses since it comes directly from the returns. Analysts expect that it would be able to deliver positive alpha relative to its category benchmark index.
(Source: Morningstar) (Source: Morningstar)
About Funds:
Robeco’s quant-based conservative equities range is managed by a stable and experienced six-member team led by Pim van Vliet. They are supported by a group of 10 quantitative researchers led by David Blitz and a similarly sized group of data scientists. This credentialed team is vital to the fund’s success as it constantly refines the models used in the funds. It is also reassuring that Robeco’s broader quantitative team has successfully groomed quantitative researchers in its talent pool, allowing them to add people with complementary skills to the teams. The strategy’s academic foundation, repeatability, discipline, and consistent execution give us confidence. The rules-based, quantitative process is built on empirical research demonstrating that investing in low-risk stocks leads to better risk-adjusted returns. It goes beyond traditional low-volatility investing, combining a multidimensional risk factor with value, quality, sentiment, and momentum factors. Top-quintile-ranked stocks are included in the portfolio after running an optimisation algorithm.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
