PRESS RELEASE
Robeco has defined its treatment of spread results in more detail. Any positive results will be distributed quarterly to the funds, pro rata to the size of a fund's positive spread result arising from entry and exit. The more detailed definition has been discussed with the Netherlands Authority for the Financial Markets (AFM).
On request of the current regulator Robeco defined its treatment of spread results in more detail. As of 1 July 2004 any positive results above a cumulative buffer of EUR 5 million will be distributed to the funds each quarter. Losses will be for the account of a separate entity, Robeco Investment Consulting (RIC). The buffer is maintained to cover any future losses. In the event that the current spread system is abolished, the available buffer will be distributed to the funds. Also when a fund leaves the current Dutch system of bid and offer prices the entitlement to the buffer will be distributed to the fund concerned. The result obtained by RIC in 2003 was settled with the current funds whose entries and exits led to a positive contribution to this result. It concerns an amount of EUR 9.8 million against assets invested of EUR 16 billion, which is 0.06%. Otherwise, RIC's methodology remains unchanged.
The AFM presented the general findings of its review of investment institutions on 27 April 2004. As the largest provider of investment funds in the Netherlands, this also involved Robeco. Robeco considers this survey to be very important as it contributes to the transparency of investment funds' cost structures. The treatment of spread results was an important subject in the discussion with Robeco.
Since investment funds in the Netherlands have to be listed, a market has to be maintained in their shares. In order not to burden current investors with transaction costs related to purchases and sales, and to prevent temporary imbalances in supply and demand causing prices to deviate too far from their underlying value, a bid/offer system is used. Under this system, transaction costs are paid out of the surcharge on the underlying value on issuance (offer price) and the discount on repurchase (bid price). The bandwidth applied is stated in the prospectuses of the Robeco funds. The margin between the bid and offer price is known as the spread. Until September 2002 the spread result, which in practice can be either negative or positive, was allocated directly to the individual funds. After consultation with the former regulator, it was decided at that time to bundle the spread results of all funds (both positive and negative) in a new entity named Robeco Investment Consulting (RIC), so that this volatile and unpredictable result would no longer be applied individually. At that time it was indicated that RIC's priority is to ensure that risk is diversified, not to realize profit. The aforementioned arrangement, including a risk buffer and reimbursement of the amount exceeding this buffer, gives further content to this objective.
For the future, Robeco would prefer a system of legislation and regulation similar to that used in Luxembourg. These funds can be bought and sold against the net asset value/underlying value, while the client knows exactly what transaction costs they have to pay. No spread applies to these funds.
About Robeco
Robeco provides discretionary asset management products and services, as well as a complete range of mutual funds to a large number of institutional and retail clients worldwide. Robeco's product range encompasses fixed-income and equity investments, as well as balanced accounts, money-market funds and alternative investments.
Robeco distributes its funds for the retail market directly, and through other financial institutions. Several of its mutual funds, including the flagship Robeco N.V., are listed on major European stock exchanges such as Amsterdam, Paris, Frankfurt and London.
As well as from its head office in Rotterdam, Robeco services its clients from its European offices in Belgium, France, Luxembourg, Switzerland, Germany and Spain. In the United States, Robeco has offices in New York, Chicago and San Francisco (Weiss, Peck & Greer), Boston (Boston Partners), White Plains (Sage Capital Management) and Toledo (Harbor Capital Advisors).
Robeco is the center for asset management with full operational independence within the Rabobank Group. The combination of the highest credit ratings from the major international rating agencies and the highest Sustainability Cluster Score within the banking sector reflects the high added value Rabobank has always offered its investors, members, clients and employees.