Robeco QI European Conservative Equities C £

Why we like the fund

This strategy follows a systematic process applied by Robeco’s quantitative investing group and targets exposure to companies with lower risk characteristics. In defining lower risk, Robeco focus on those companies with below average share price volatility, less market beta exposed and with lower probability of default.

The strategy aims to provide drawdown protection to add value when the market sells off sharply. The strategy also incorporates valuation and momentum considerations when ranking stocks so as to ensure they do not ‘overpay’ for defensiveness or safety and avoid companies that are on a negative trend (in their profits or their share price). The incorporation of value and momentum as well as low risk factors differentiates this strategy vs. a low volatility index and allows it to capture some additional upside.

The fund is likely to outperform the broad market in negative market environments but will likely lag fast rising markets, particularly where the performance is driven by more volatile or cyclical stocks.

How to use this fund

This fund acts as a risk reduction tool that should reduce both volatility of returns and the drawdowns. It can either be held as a standalone investment (if one is looking for lower risk equity exposure) or held alongside a higher risk equity investment - either a value biased manager, aggressive growth or a small/mid cap biased strategy.