OUTLOOK 2018 PLAYING IN EXTRA TIME LUKAS DAALDER CIO ROBECO INVESTMENT For professional investors only

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1 OUTLOOK 2018 PLAYING IN EXTRA TIME LUKAS DAALDER CIO ROBECO INVESTMENT For professional investors only

2 TERUGBLIK OP VORIG JAAR

3 VORIG JAAR SOMBERHEID en onzekerheid POPULISME Brexit, Amerikaanse en Franse verkiezingen QUANTITATIVE EASING uitgewerkt?

4 WAT IS ER VERANDERD? IMF World Economic Outlook Seeking Sustainable Growth? Optimisme Too slow for too long Uncertainty aftermath U.K. Referendum Gaining Momentum? A Firming Recovery April Tijd 2017 July 16 April 17 July 17 Oktober 17 source: IMF, World Economic Outlook

5 MARKT IN LIJN MET OPTIMISME 1 YR 3 YR 5 YR Global real estate Oil Index Gold Emerging Markets (in EUR) Global Equities (local) 17,9% 18,8% AANDELEN & CREDITS hoog risico Fixed Income EMD Hard Currency (unh. in EUR) German Government Bonds EMD Local Currency (unh. in EUR) Japan Government Bonds Global Government Bonds US Government Bonds Italy Government Bonds France Government Bonds Spain Government Bonds Investment Grade Europe Global Investment Grade Bonds Global High Yield Investment Grade US 1 YR 3 YR 5 YR 2,6% 3,7% 6,1% 6,4% source: Bloomberg, Robeco

6 MARKT IN LIJN MET OPTIMISME 1 YR 3 YR 5 YR Global real estate Oil Index Gold Emerging Markets (in EUR) Global Equities (local) AANDELEN & CREDITS hoog risico OBLIGATIEMARKTEN de daling lijkt eindelijk ten einde Fixed Income EMD Hard Currency (unh. in EUR) German Government Bonds EMD Local Currency (unh. in EUR) Japan Government Bonds Global Government Bonds US Government Bonds Italy Government Bonds France Government Bonds Spain Government Bonds Investment Grade Europe Global Investment Grade Bonds Global High Yield Investment Grade US 1 YR 3 YR 5 YR -0,9% 0,0% 0,7% 0,7% 1,1% 1,2% 1,4% source: Bloomberg, Robeco

7 2018 HET NIEUWE JAAR

8 RISICO IN DE MARKT OVERWAARDERING

9 RISICO 1: OVERWAARDERING S&P S&P 500 S&P 500 earnings source: Bloomberg, Robeco

10 RISICO 1: OVERWAARDERING CAPE : Dotcom Bubble 40 Price Earning Ratio (CAPE, P/E10) : Panic of : Black Tuesday 1966: Crash of : Depression of : Early 1980 s recession source: Shiller database

11 RISICO 1: OVERWAARDERING CAPE Shiller CAPE Q Ratio (RH) Buffett Indicator (RH) source: Shiller database 0.2

12 RISICO 1: OVERWAARDERING Europese obligaties markt nog steeds overgewaardeerd Draghi: whatever it takes Y fair value estimate German 10Y bond yield (actual) source: Thomson Reuters Datastream, Robeco

13 RISICO 1: OVERWAARDERING Global Credit Spread lang termijn gemiddelde source: Bloomberg, Robeco

14 RISICO 1: OVERWAARDERING Global High Yield Spread lang termijn gemiddelde source: Bloomberg, Robeco

15 RISICO 1: OVERWAARDERING Op de lange termijn belangrijk, maar op korte termijn is alles mogelijk 100% % 50% 25% 0% -25% 1 Year 3 Years 5 Years 10 Years

16 RISICO IN DE MARKT OVERWAARDERING LATE CYCLE

17 RISICO 2: LATE CYCLE FOR CREDIT CYCLE Verslechterde kredietkwaliteit Market Phase Bottom Early Stage Recovery Mid Stage Bull Market Peak of Bull Market Bear Market INVESTMENT GRADE GLOBAL HIGH YIELD EMERGING CREDITS EUROPEAN HIGH YIELD Fundamentals 20% Improving but ignored 30% Solid underlying performance 40% Sweet summer of growth 20% Optimistic, longduration projections 30% Over-awareness of deteriorating conditions Valuation 20% Attractive, but no takers 50% Abundant bargains 30% Willingness to pay up 20% Revised models justify stretching 20% Shocked recognition of outlandish prices paid Psychology, Technical and Liquidity 60% Exhaustion, disbelief and demorilization 20% Doubt, reflection and conversion 30% Faith, hope and charity 60% Euphoria, greed and extrapolation 50% Fear, panic and loathing source: Robeco, Morgan Stanley, June 2017

18 RISICO 2: VERSLECHTERDE KREDIETKWALITEIT Late cycle for credit cycle Ba B Caa/Ca source: Moody s

19 RISICO IN DE MARKT OVERWAARDERING LATE CYCLE CHINESE SCHULD

20 RISICO 3: CHINESE SCHULD NADERT DRAAIPUNT De eeuwige belofte van a crash waiting to happen 250 Start of the lost decade Start of the euro crisis?? Private sector total dept as % of GDP Start of the Asian crisis 0 Japan Thailand Spain China source: Expected Returns

21 RISICO IN DE MARKT OVERWAARDERING LATE CYCLE CHINESE SCHULD MONETAIR BELEID

22 RISICO 4: DRAAI IN MONETAIR BELEID Van quantitive easing naar quantitive tightening = Fed balance sheet (l) S&P 500 (r) source: Bloomberg, Robeco

23 RISICO IN DE MARKT OVERWAARDERING LATE CYCLE CHINESE SCHULD MONETAIR BELEID

24 RISICO IN DE MARKT OVERWAARDERING LATE CYCLE CHINESE SCHULD MONETAIR BELEID MAAR OOK RUIMTE VOOR OPTIMISME

25 OPTIMISME: GROEI De groei trekt wereldwijd verder aan ISM (non-)manufacturing Tankan Eurozone ISM Manufacturing ISM non-manufacturing Jul - 17

26 OPTIMISME: GROEI De groei trekt wereldwijd verder aan ISM (non-)manufacturing Tankan Eurozone Large manufacturers actual source: Thomson Reuters Datastream

27 OPTIMISME: GROEI De groei trekt wereldwijd verder aan ISM (non-)manufacturing Tankan Eurozone Eurozone PMI Output Index, sa, 50 = no change Eurostat, 3m/3m % change PMI Output Index Industrial Production (excluding construction)

28 FAVORIETE UITKOMST Duitse kapitaalmarkt rente source: Bloomberg, Robeco

29 FAVORIETE UITKOMST Aandelenmarkten source: Bloomberg, Robeco

30 RISICO S OVERWAARDERING LATE CYCLE CHINESE SCHULD MONETAIR BELEID OPTIMISME MOMENTUM STERK INFLATIE AFWEZIG CENTRALE BANKEN

31 DISCLAIMER Disclaimer Robeco Institutional Asset Management B.V., hereafter Robeco, has a license as manager of UCITS and AIFs from the Netherlands Authority for the Financial Markets in Amsterdam. This statement is intended for professional investors. Therefore, the information set forth herein is not addressed and must not be made available, in whole or in part, to other parties, such as retail clients. Robeco disclaims all liability arising from uses other than those specified herein. Without further explanation this presentation cannot be considered complete. It is intended to provide the professional investor with general information on Robeco s specific capabilities, but does not constitute a recommendation or an advice to buy or sell certain securities or investment products. All rights relating to the information in this presentation are and will remain the property of Robeco. No part of this presentation may be reproduced, saved in an automated data file or published in any form or by any means, either electronically, mechanically, by photocopy, recording or in any other way, without Robeco's prior written permission. The information contained in this publication is not intended for users from other countries, such as US citizens and residents, where the offering of foreign financial services is not permitted, or where Robeco's services are not available. The prospectus and the Key Investor Information Document for the Robeco Funds can all be obtained free of charge at Investment involves risks. Before investing, please note the initial capital is not guaranteed. The value of the investments may fluctuate. Past performance is no guarantee of future results. Historical returns are provided for illustrative purposes only. The price of units may go down as well as up and the past performance is not indicative of future performance. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency.

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