Based in the Dutch town Utrecht, Rishma Moennasing is a senior analyst funds at Rabobank, focusing on equity and SRI funds.
She is part of a 20-people strong investment team, managing assets in the double digit billions of euros. Rabobank has developed a strong focus on passive investments, which currently account for 60% of the group’s guided architecture approach, and Moennasing expects the share to increase even further.
“In sectors such as emerging markets or small caps, we do still invest actively, [but] with markets becoming increasingly more efficient you will have to look very hard in order to find consistent outperformance,” she argues.
BRIDGING THE GAP
Sustainability plays a key role for Rabobank. There is of course an inherent tension in the growing trend towards sustainability, and the shift towards passive investments, with many passive funds by definition unable to exclude certain sectors or companies.
But bridging the gap has become increasingly tangible, argues Moennasing. “The variety of sustainable indices has increased strongly. Moreover, we are increasingly looking towards sustainable smart beta strategies, which offer even further opportunities to take SRI factors into account.”
As a relatively large bank, Rabobank aims to capitalise on its size when selecting the most suitable funds to include on its buy list, both in terms of sustainability and in terms of price.
Even before commencing the fund selection process, the asset management institution as such is screened for its compliance with SRI criteria, which includes three minimum requirements: “They must have signed the UN PRI (United Nations Principles for Responsible Investment) initiative, they must integrate the UN Global Compact into their process, and they must exclude controversial weapons,” Moennasing explains. It is only once the asset manager passes this hurdle that the actual selection process begins.
“For fund selection we look to quantitative and qualitative qualitative criteria, and both are important. For passive funds we prefer physical replication and a low tracking difference and there is also a strong focus on fees, especially for active funds. We prefer to invest in the share class with the lowest fees, or asset managers that will create special share classes for Rabobank with lower fees.”
While cost pressures are affecting active and passive managers alike, sourcing funds which still offer opportunities in active management becomes an even bigger challenge.
Besides the obvious quantitative data, Moennasing has a broad spectrum of factors she takes into account. “Important are a genuine passion for investments; the fund manager should really be an expert on his or her area and stick to their policy, even in difficult times.”
“Besides that, I like diversified teams with a good balance between male and female members and different cultures, teams that don’t just consist of CFA’s, but people with a diverse background and education. We like fund managers that can think outside the box, people with a broad view that are well-read, not just in their area of expertise. Some of the best fund managers I know have studied completely different subjects, such as philosophy.”
Looking at the future of the asset management industry, Moennasing predicts two key trends. Firstly, she expects the growth of passives to continue. “The amount in active funds will decrease because, in general, there are still too many expensive benchmark huggers.
Active fund managers will have to reduce their fees and only those asset managers specialized in certain strategies will survive.”Secondly, she believes that demand for sustainable strategies will increase. “ESG or SRI criteria will increasingly become a standardacross the industry. Asset managers will have to integrate them into their investment processes because investors like us are focusing on it and demanding it.”
Moennasing is a senior equity fund analyst at Rabobank Nederland Retail & Private Banking, where she covers equity strategies including SRI funds, she joined the group in 2008. Moennasing has also contributed as an investor and coach to BiD Network, an organisation providing assistance to entrepreneurs in the emerging markets. Prior to joining Rabobank, she spent nine years at ABN Amro Private Banking & Asset Management, of which five as fund analyst, two years as portfolio manager and four as equities analyst.