Lettura per il Weekend - gz
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By: GZ on Domenica 04 Maggio 2003 23:42
Intervistano su Barron's Jacob Van Duijn il gestore del maggiore fondo globale basato in Europa, il Robeco Fund, in Olanda con 6.4 miliardi di dollari in gestione.
Noto tre cose (oltre al fatto che parla bene di ING e STM su cui sono pure favorevole):
i) Jacob Van Duijn ha reso del 1995 a oggi con il Robeco Fund il +78% nonostante il crollo degli ultimi tre anni (il che dimostrerebbe che nel lungo periodo stare investiti in borsa ha pagato finora....)
ii) Van Duijn crede in una ripresa economica modesta, compra l'america a preferenza dell'europa, ANCHE SE PENSA CHE IL DOLLARO PERDA ancora. E quindi lo vende short come protezione. Dato che è un tizio che gestisce più soldi di altri in europa e il motivo è che ha guadagnato negli ultimi 8 anni un +78% nonostante tutto prendiamone nota. Il fatto che pensi che il dollaro scenda non gli impedisce di comprare ora di preferenza azioni americane.
iii) compra azioni americane di preferenza perchè pensa che in europa (e in giappone) in generale prevalga un atteggiamento per cui "ci si accontenta", si bada a difendere quello che si ha già e non si punta ad accrescerlo.
Secondo Van Duijn in Giapppone e in Germania si vede tanta gente ben vestita e tranquilla che cerca di spendere e invecchiare (anche in senso del tasso demografico), privilegiando la sicurezza sulla crescita (e il rischio). Per gli investimenti però sono meglio invece zone dove prevale un atteggiamento più dinamico, come l'asia (ex-giappone) e l'america.
Mi piace questa descrizione dell'Europa:
"....The mood has changed, and people are probably less willing to accommodate others. In Europe, there's wealth, demand and purchasing power, but Europe as a location for production? No. I guess we are going to be sort of a big Florida with a lot of consumers, friendly people, gray hair and big spenders...
"... (germania) ... the strength of the unions is a hampering factor. In Germany, there is a strong desire to maintain what has been accomplished, rather than give up some of it for better performance later. There's a low labor force growth rate. And the German population will be the first one, after Japan, to actually decrease because of its demographics. The Germans would rather protect their wealth than go out and get more. If that's what the collective desire is, so be it. But for us investors it's probably time to move someplace else..."
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Robeco Fund's Van Duijn runs marathons and a fund with long-term returns of 78.7%
By VITO RACANELLI
AN INTERVIEW WITH JACOB VAN DUIJN -- To win, investors, like marathon runners, have to go the distance and overcome disappointment, says Jacob Van Duijn. He ought to know. Van Duijn runs the Robeco Fund, the oldest mutual fund in the Netherlands and, with €5.7 billion ($6.40 billion) in assets, the largest global fund in Europe. He also runs in marathons; he took part in Rotterdam's last month and finds time to be chief investment officer of Robeco, an asset-management firm which oversees €100 billion in investments. Like other growth-fund managers, he hit the wall in two of the past three years. Yet his long-term record is none too shabby. Through the end of 2002, the fund had returned 78.7% since he took its helm in the second half of 1995. That showing easily outpaced the 58.5% turned in by the benchmark MSCI World Index.
We asked this veteran investor, who's the author of The Long Wave in Economic Life, one of the best-known books on economic cycles, for a European view of the global investment environment. The upshot: The grass is greener in the United States. He's warmed up to American health-care and technology stocks and is selling bank shares.
Barron's: What's your view of the global economy this year and next?
Duijn: We've had a very long downturn, so if the economy had been left on its own, this year would have been a recovery year. But we've lost time because of the war uncertainty. Companies have postponed capital spending. Consumers are postponing spending. Calendar-year 2003 will probably see a meager recovery. The U.S. still could grow by 2½%, but Europe is lagging, as always. I think we're down to 1% to 1½% this year. China remains sort of the epicenter of world economic growth. And most companies there should benefit from [an eventual pickup in spending]. Japan doesn't look like it is going to generate more than 1% growth.
Q: But you're clearly optimistic.
A: Given the underlying sound fundamentals for the global economy, I expect a recovery once the war concerns are out of the way. Time is becoming your friend now because there is only so much downturn you can handle before you have to start investing again. This market downturn has already lasted longer than the 1929 Crash. March 10 was the current downturn's third anniversary. That in itself doesn't mean much, but back in '29, you had a depression coming, and I find it very difficult to see a depression. That was the end of a long period of growth. Today, we are only in the beginning phase of benefiting from the digital revolution.
Q: So you prefer...
A: The American economy is further along in the cycle and ready to recover. Not so much because of consumer spending, but mainly through capital spending and inventory rebuilding. I would expect consumer spending to slow further -- it usually goes to zero in a downturn -- and the pickup should come from capital restocking. The recent outperformance of information technology, as a sector of the stock market, is probably related to a better outlook from software and the hardware replacement. So North America would be my No. 1 pick and, in a way, the weakest area of the world is probably continental Europe. It looks like Europe is gradually moving toward a state where...let's say the level of wealth is fairly high, but the desire to add to it is lacking. And in that sense, it's similar to Japan. If you walk the streets of Tokyo and Munich, you see pretty much the same picture. Well-dressed, wealthy people, but with a strong desire to spend and go on holiday, rather than work. In the Robeco fund, we are underweight Europe and overweight the United States. Japan is still a slight overweight, even though it has been disappointing so far this year. Hong Kong we don't particularly like at this point, with the SARS [severe acute respiratory syndrome] problem.
Q: Which sectors do you like?
A: Health care and information technology. IT because of the economy and the notion that after three years of downturn, this is probably the sector that is going to recover first. As I said, there is only so much postponing of spending you can do; IT is one sector where replacement demand will start to play a role later this year. Core stocks there would be Cisco Systems and Microsoft, which are in our top five holdings, as well as IBM, Hewlett-Packard and Dell. Microsoft and Cisco are attractive because they are leaders in their markets, which are increasingly oligopolistic in nature, meaning they will have pricing power, going forward. We also like their balance sheets. They are debt-free.
In Europe, we hold SAP, which was recently increased in our portfolios, and STMicroelectronics. The former is one of the few leading Continental technology companies, so European money moving into that sector is likely to end up partly in SAP, as well as in STM.
For the Robeco fund, we have been adding most to pharmaceuticals recently because of its valuation levels, compared to its long-term earnings growth rate. It is the premier growth sector in an aging world. The preference is for U.S. pharmaceuticals, where it looks like the patent expiry problems are out of the way and they have an advantage in terms of the currency, compared with their European counterparts. Pfizer and Merck are among our top five positions. Pfizer and Merck have P/Es around 16 and a long-term earnings growth rate around 10%. We like their 30% to 35% returns on equity.
And we are underweight in the consumer area, especially staples, like Nestle, Unilever, Procter & Gamble. Utilities are also an underweight position. We're not expecting a recovery from the consumer side, but rather from the production side of the economy.
Q: Any names outside health care and IT?
A: French insurer AXA and Dutch insurer ING we've bought because of the recovery potential of insurance in a stock-market upturn. We switched out of Germany's Allianz and into AXA. The valuation is attractive now, and AXA should benefit through their asset-management division from a market recovery. Also, we expect the stock to do better because it doesn't have the cross-holding problems that German companies do; we don't like Germany's financial sector.
ING we still like because it also should do well because of its mix of insurance and banking. The market is really too focused on insurer asset valuations, because ING is well-run. ING has been one of our disappointments. We had an overweighting on it, and I started to increase the overweight last July and suffered because it underperformed when the asset concern became a dominant theme. Yet ING has a P/E of just seven times to eight times, its lowest in over 10 years.
Nokia is still a core holding. As a global leader in handheld phones, it is rather cheap. In Europe, Novartis is one of our core holdings, as is UBS, L'Oreal, Royal Dutch and Telefonica.
Q: So where's the money coming from for all these overweights?
A: We are cutting back on the banks in general, but especially U.S. banks because of the interest-rate cycle. That has been the main source of funds in March, when 1%-1½% of the fund went out of financials and into health care.
If anything, we will get higher rates going forward. In retrospect, they were a very defensive sector and outperformed the market from 2000 onward, so it was with some hesitation that we sold some shares of Bank of America, which was our biggest overweight for many months. The shares are still cheap, but I think we want to move away from them toward more traditional growth sectors like health care and IT. Additionally, some Wells Fargo was sold, and Wachovia we sold out altogether.
Q: Do you typically have target prices for stocks?
A: No. We pick stocks mainly based on the fundamentals of the company, its position within its sector, its competitive position. Then for, let's say, some short-term holding, we use quantitative rankings. The sell discipline we most often use is through quantitative screens. The Robeco screen looks at a valuation basket, earnings-revision basket, a growth basket, a corporate-policy basket and a momentum basket. So we pick equities up if they are in the top 20% of our screens, and sell if they drop below [the top] 40%.
Q: Do you think that investor expectations have changed enough about what long-term stock returns might be?
A: We're overshooting on the downside, just as we overshot on the upside. It shows up in very negative sentiment. What would have been a normal business cycle downturn caused by the excessive capital spending in IT and telecom has lasted three years now, which is very long. After the 9/11 attacks on the World Trade Center, things have gone from bad to worse. The recession was half over by then. Then in spring 2002, you got all these corporate accounting scandals, and then the war against terrorism building up. Then we actually did get the war. So, every time, something has wrong-footed the economy again.
Everyone is downsizing their long-term expectations. Let's say that markets don't recover through the balance of this decade back to where they started in 2000, but rather stay within 10% to 20% of that level.
Well, when you calculate what returns you might expect from here, they're all in double digits in the coming five or six years. Normally, if the 5% nominal growth of the economy is, say, 2% inflation and 3% growth, listed companies typically do a little better than the overall economy. They should be able to grow their earnings at least by 7% a year. Given where we are, that indeed does translate to at least 7% per annum and probably a bit more with the present low level of bond yields.
Let's just go back to the true basic: Over the very long haul, equities return around 10% to 11% a year. That would be my expectation, rather than a single-digit number for the balance of this decade.
Q: How much longer does the bear market go?
A: The marker is still the intraday low of Oct. 10 last year. And as long as that holds -- and it has held for the S&P [768.3 on that date] and the Dow [7197.49] and Nasdaq [1108.49] -- that would be my low point. Now you might argue that European markets have moved far below that level. The only explanation for this is the difference in underlying fundamentals or earnings. It could be that we are still in a downtrend in Europe.
I still have some hope that we might have three good years ahead of us in terms of the underlying economy, which I find much stronger than the stock market gives it credit for. Compare the present rate of productivity growth in the global economy to that in the past 30 years; it's better. Last year, the U.S. had 5% productivity growth. That's phenomenal, if you consider that you are in a recession. Unemployment is the lowest it has been in a recession since the 'Seventies. Inflation is close to zero.
For 50 years, we've been working hard to get inflation down to where it ought to be. Then, when we get there, people say, "Uh, oh, there is going to be deflation." I find that very strange when the true fundamentals -- unemployment, inflation, productivity growth -- are better than you've seen since the 1960s. It's just the boom which got in the way and then the subsequent bust, plus all these exogenous events starting with the 9/11 attack. That event totally disrupted the global recovery and has kept postponing it till this very day.
We still haven't fully adjusted our spending to what seems to be for most people different economic conditions. So this year should see, as I said, a further slowdown in consumer spending growth.
Q: Which explains your consumer-staples underweight?
A: That's right. It is going to be a transition year. Maybe in two or four years we'll see what you saw in 1990-94: a collective accelerating recovery process.
Q: What are your expectations for European economic growth and profits growth this year?
A: The consensus is for 30% profit growth, albeit from a low base, but 15% is more likely, especially with the most recent data pointing to a slowdown again. I would say 80% of the gains will come from cost reduction and the rest from the revenue-growth side. I'd be most optimistic for the Anglo-Saxon and Scandinavian markets, as opposed to continental Europe. The Continent is sort of drawn down by the weakness of Germany.
Q: What about Europe's most important country? Do you think Germany is going to turn itself around?
A: Not in the short term; you need the desire to do so, but the strength of the unions is a hampering factor. In Germany, there is a strong desire to maintain what has been accomplished, rather than give up some of it for better performance later. There's a low labor force growth rate. And the German population will be the first one, after Japan, to actually decrease because of its demographics. The Germans would rather protect their wealth than go out and get more. If that's what the collective desire is, so be it. But for us investors it's probably time to move someplace else.
Q: So you are underweight in Germany?
A: Yes. There is also the element of the weak financial institutions. Part of the explanation is cross-holdings of Allianz, Munich Re, Commerzbank, Deutsche Bank, so that weighs heavily on the overall market. Also, you lack a strong health-care sector; you don't have big names, like the U.K. does. So the composition of the market is not very attractive from a growth investor's point of view.
Q: But the EU has been trying to liberalize its markets for 10 years at least, particularly its financial markets. What do you think of the progress so far?
A: From a very long-term perspective, there should be benefits. [After] the Treaty of Rome in 1957 when the union was formed, European growth was much higher in the 1960s. But that was at a time when we still wanted to get ahead. And now it becomes more of a distribution matter. If you are going to allow Poland and Hungary and the Czech Republic into the EU, it means a redistribution of wealth from us to them. I guess that's all right if you grow at 3%, 4% , 5% or 6% a year, as in the 'Sixties, but not now. The mood has changed, and people are probably less willing to accommodate others. In Europe, there's wealth, demand and purchasing power, but Europe as a location for production? No. I guess we are going to be sort of a big Florida with a lot of consumers, friendly people, gray hair and big spenders.
Q: Is the strong euro a significant issue for European profits?
A: A fairly strong issue. We are in a multi-year weakening dollar mode. Past dollar moves have been five-to-seven-year moves and, given the still-rising U.S. trade deficit, it would seem to me that you will see a further weakening of the dollar. That in itself doesn't help the European economies in terms of their competitive position. I think that the U.S. deficit problem has to be corrected, and I see no other way but for the dollar to weaken. We have been hedging our dollar exposure within our portfolios, to the extent allowed.
Q: Clearly, you are optimistic about equity markets. Where might you be wrong?
A: Exogenous events. I think it would be the aftermath of the war in Iraq -- whatever is going to be next in terms of global politics, particularly U.S. politics. Will this involve an occupation of Iraq? I find it difficult to comprehend what the next steps will be. What will happen in Syria, Iran, North Korea?
The main fear is noneconomic. If left to itself, the economy will recover. Inventories get depleted and you start restocking, and that's how the ball starts rolling again. In the very long run, stock markets have a relationship with the economy. They exaggerate tremendously in both up and down cycles, but ultimately, they make sense. But how do you handle a possible earthquake in Tokyo? There isn't much you can do about it. In the end, I believe that those billions of people going to work every day and those millions of firms making decisions, buying, selling and investing, are the dominant force
