In the latest in our series, Portfolio Adviser hears from Robeco head of UK wholesale Nick Keem (pictured, below right)
Which asset classes and strategies do you anticipate intermediary clients focusing on in 2022?
There are different angles to approach this question but significant and well-documented characteristics persist in our market place. The hunt for yield, valuation, inflation, value/growth, China, liquidity … all of these are to be set against a backdrop of divergent central bank action around tapering and rates. Quite a conundrum.
One topic that has been central to most client conversations and editorial inches during 2021 is the integration of ESG criteria. This trend will only continue as we progress through 2022 and beyond. The dialogue will evolve and, in doing so, will shape how allocations are made over the coming decade.
Fixed income assets are a particular area of intrigue to investors as few demonstrable options are available in the market to facilitate a sustainable approach. The Robeco suite of fixed income strategies is progressive in its approach to sustainable investing, offering ESG-integrated and climate (Paris-aligned) along with impact strategies aligned to the UN’s Sustainable Development Goals across the spectrum from aggregate to high yield.
Should end-investors – and, by association, asset managers – be thinking beyond equity and bond investments? Towards what?
For as long as we, as an industry, rely on indices and benchmarks for measuring relative performance, equity and bond investments will persist as the bulk of client allocations. That said, the form of these allocations is evolving – for example, we are experiencing the continued shift from domestic UK assets to more international across both fixed income and equity allocations.
Alongside this is the rise in demand for thematic impact strategies – for example, water and biodiversity. This trend is being driven both by the potential for long-term investment returns and also the increased awareness and the desire for a more sustainable investment approach.
“Value is not just about the price that is paid for a strategy – it is about the client experience”
Given client and regulatory pressure on charges, how is your business delivering value for money to intermediaries and end-clients?
As a business, we regularly review the pricing structure of our strategies to make sure we are offering value to our clients. Value is not just about the price that is paid for a strategy – it is about the client experience. Do we as a company match the expectations of the client and how can we further support our clients and their businesses to deliver this value to their clients?
We continue to witness a bifurcation within the industry between passive and active. Given our experience in the world of sustainable investing, we continue to strive to develop new and innovative investment approaches -for example, developing the first Paris-aligned aggregate and global corporate benchmarks – that deliver a differentiated offering as well as value to our clients.
How much of your distribution is currently oriented towards ESG issues and sustainable investing? How do you see this evolving?
Sustainability is at the heart of Robeco’s approach to investing across the business. We first started to adopt this approach in the 1990s and it has been at the core of all aspects of our business since the mid 2000s. Having this depth of knowledge and experience creates a wonderful platform to be able to engage and assist our clients on their journey to a more sustainable approach to investing.
We have seen a significant shift in the nature of client dialogue more recently, with ESG requirements becoming increasingly important. This is a movement that will not abate, however – instead, the context of the dialogue will evolve as both client needs evolve and new ways of implementing investment solutions are developed.
“Looking to the future, offering flexibility – whether to clients or employees – will be critical to a company’s success”
In what ways do you think the experience of lockdown has permanently affected or changed the asset management sector?
A word we have all used many times over the course of the past few months as the workplace has opened up one more: flexibility. The final shape of our day-to-day working environment is still yet to be determined. As I write this, we are in the midst of Omicron and the vast majority of us are being asked to work from home once more. We have evolved quickly, however, both as individuals and as an industry. Looking to the future, offering flexibility – whether that is to our clients to accommodate how they now wish to be engage with or to employees on the work life balance they have come to embrace – will be critical to a company’s success.
How do you plan to balance face-to-face and virtual distribution? Have you identified aspects where one is especially better (or worse) than the other?
Balance is the correct word and that balance will be determined by the preference of our clients. Fundamentally, our industry is underpinned and built on people and I am sure we would all agree there are great benefits to be gained from in-person meetings.
Our starting point as a distribution team is to be out from behind screens and meeting clients face-to-face. That said, depending on the nature of the interaction, we have seen an improvement in the quality and efficiency of meetings through the use of technology in a virtual environment. And the occasional local village pub lunch with a client has been a very enjoyable development I hope will persist …
How did you spend the Christmas break?
A quiet Christmas with the family down in rural Kent, mainly spent building a Lego Millennium Falcon with my son. I will leave to you to decide who enjoyed this more!
What aspects of your own lockdown routine do you expect to continue with as people migrate back to office-working?
Being more present at home with the family. With a young family it has been immensely enjoyable to be more involved in their day-to-day lives, the school run, sports fixtures, nativities. Although, like many, I am sure I do not miss the home schooling … Having the opportunity to be more flexible in our approach to work has ‘quite rightly’ been adopted as the norm and I see great benefits both from an individual perspective and for our industry in this movement.
More generally, what are you expecting from ‘the new normal’?
It is very hard to go back once change has been initiated, especially if this change is viewed as positive by those who are affected. Recognition of improved work life balance and the realisation this does not impact on productivity will lead to persistency around flexible working arrangements. By offering greater flexibility as an industry we will be able to access a much larger and diverse talent pool, which can only be a positive for our collective futures.