investing in the world of tomorrow...investing can potentially earn a higher yield than savings. you...
TRANSCRIPT
Trends, advice and expertise for investors
Investingin the worldof tomorrow
In this guide...
1 Looking for more protection? 04
2 Why it’s a good idea to remain invested 09
3 Impact investing: the essence of sustainable investing 13
4 Are we increasingly opting for thematic investing? 19
5 Is Belgian property still attractive as an investment? 23
Contributors to this inspiration guide:Rudy Vandorpe, Head of Portfolio Management at ING - Frédéric Degembe, Portfolio Manager at ING - Frédéric Dalaidenne, Investment Officer at ING - Ruben Smets, Investment Specialist at ING Private Banking - Lorenzo Van Der Vaeren, Investment Officer at ING - Steven Trypsteen, Economist at ING - Peter Kruyniers, Fund Manager at ING - Peter Vanden Houte, Chief Economist at ING
3
From information to insight
Investing can potentially earn a higher yield than
savings. You are already convinced of that. Perhaps you
are investing already, or have done so in the past.
Investing is done over the long term. And that’s a good
thing because the course that markets take means that
they are unpredictable in the short term. The French
stockbroker Jules Regnault summed it up 160 years ago
in this quip: “The stock market moves like a drunk man
walking across the pavement. He does move forward, but
you can’t guess where his next step will land.”
Despite all the supercomputing currently available, no
one can predict what markets will do tomorrow, or in the
coming years. That’s why it’s always a good idea to stay
invested. Now, and in the future. When things go well,
and also when they don’t go as well as they might.
You should have a good idea, however, of what to
invest in under which types of market conditions.
Trends come and go. Economic centres of gravity do
shift, and geopolitical developments can sometimes
be surprising. Above and beyond these factors, the
investing landscape is itself fully in transition. Just think
about how strongly sustainable investing has emerged.
In this brochure, we would like to take you with us as
we review some topics that will colour the coming
years. And we will offer solutions for you. Regardless
of which direction the market or the economy turns.
As experts in investing, we at ING are here to help you
make the right choices for today and for the future.
We hope you enjoy reading it.
4
If you are looking for potentially higher
returns on your money, then you have
little choice these days but to invest.
In exchange for that potentially higher
yield, you must also be prepared to take
on a certain amount of risk.
Spread your investments from the start
across diverse regions, sectors, financial
instruments - it all helps to spread risk.
You can also apply other strategies to
protect yourself, for example, interval
investing of your capital.
Looking for more protection?1
5
Looking for more protection?
It’s best to build in these protective
strategies from the start. But your
personal appetite for risk may change
over the years. Or the economy and the
markets may come to look completely
different, which might prompt you to
want to scale back, or conversely, to
build up an extra buffer. However, as an
investor, it is difficult to get an accurate
picture of it. When should you build in
more protection? When should you invest
more in shares, or more in bonds? …
In practice, many investors make decisions
based on intuition. This often leads to
taking profit too quickly, or holding under-
performing investments for too long. After
a few months or years, there is no longer
a clear strategy.
6
Looking for more protection?
The following graph illustrates this well:
Investing is (too) often emotional…
Time
Trad
ing
pric
e
The market is again on the rise. Maybe I should buy again.
What now? Falling again?
Perhaps I should have another try?
The market seems to be going up. Perhaps I should buy.
I’m unsure – I’ll wait a bit.
It’s sinking faster now. What if it falls even more?
Uh-oh. It’s going back down, no need to panic, it’ll bounce back.
The trend is continuing. I’m buying!
The market’s soaring. I’m going to buy!
I don’t want to lose any more money. I’m selling!
I’m getting out. I’m selling!
7
Looking for more protection?
More protectionIf you want to build in more protection,
it’s best not to operate on impulse.
The first step is to review your investor
profile and to steer it. You can do that
together with an ING advisor. That way
you can see if your investment portfolio
is still aligned to your risk appetite. Are
you looking to adjust your investments
to build in more protection? If so, there
are various options open to you.
1. Choosing investment funds with
a defensive orientation. This involves
a professional manager building in
protection where he or she deems it
necessary. In addition to defensive
investment funds, and if it is compatible
with your investor profile, you can also
choose flexible, mixed investment funds.
In these funds, the manager is free to
respond to market conditions by moving
investments from riskier to less risky
asset classes.
As a private customer at ING you can
invest in more than 60 investment
funds from five different fund partners.
Each month, ING selects 15 investment
funds from this broad spectrum.
This shortlist is made up of investment
funds that are aligned to the
investment strategy of the bank.
And so also to the vision of the
bank with respect to risk-appetite
and protection. If, for example, the
economists and investment experts
at ING expect less buoyant times, it
will translate into more caution in the
selection of the 15 investment funds.
It is important to realise that investment
funds – even defensive investment funds
– do not offer capital protection; their
value can rise as well as fall.
8
Looking for more protection?
2. Choosing for structured products with
capital protection when they reach final
maturity. These are investments whose
yield depends on a specific scenario and
an underlying value. The return can, for
example, be linked to the evolution of
basket of shares over five, seven, or ten
years. If the shares perform well over
that period and in accordance with the
product conditions, you will receive a
coupon (profit distribution). Regardless
of how the underlying index performs,
you will receive a predetermined
percentage of your invested capital back
at the end of the term (unless the issuer
goes bankrupt). In other words, these
products concern solutions with capital
protection, not a capital guarantee.
More information• Contact an ING advisor
• Surf to ing.be/investors
9
The past few years have seen new
records set for exchange rates
tables. Many investors gave serious
consideration to withdrawing
completely. Many people who weren’t
yet invested, considered waiting until
the market fell again before starting
to invest.
As investors, we all want to be in the
market when it is performing well.
And not to be in the market when it’s
performing poorly. That often results in
us withdrawing too early. Or waiting
with investing. And keep on waiting to
(re)start our investing.
Why it’s always a good idea to remain invested2
10
Why it’s always a good idea to remain invested
The number of investors who get their
timing right year after year can be
counted on one hand. Fully withdrawing
in the hope of entering when prices are
lower again? That might work once,
but not time after time. Timing the
market is extremely difficult, even for
professionals.
Continual entry and exit costs not
only a lot of potential return, but also
stock exchange transactions taxes,
transaction taxes, and more. Investing
is done over the long term, so it is best
to stay invested. That does not mean,
however, that you don’t have to look at
your portfolio for 10, 20 or 30 years. It
remains prudent to look at your assets
regularly and to make adjustments
where necessary, when your risk
appetite increases or decreases.
11
Why it’s always a good idea to remain invested
Interval investingIf you are concerned about the right
timing for exiting and entering the
market, an alternative is investing
at intervals. This approach involves
spreading your investments over time.
It is important to stay the course: even
at times when the market dips and it
is often a perfect moment to buy.
You may also find yourself investing
when the market is a bit higher, and at
times when the market is lower - that’s
how you will arrive at an average return
across the entire period. It’s easiest to do
this with a standing order, so that you
do not invest on the basis of intuition
or an arbitrary decision.
Interval investing is available from 25 euros per month. • Contact an ING advisor
• Surf to ing.be/investors
12
Investing in impartiality? Choose a guided, open architecture
Many banks use a closed architecture.
This means that they only offer
products from their own bank.
For years, ING has offered what is
known as guided, open architecture.
That means that the bank offers
solutions not only from its own
bank, but also from other financial
institutions and fund houses. It
enables ING to recommend solutions
that match the profile, financial
objectives and needs of every investor.
Do you invest in funds as a private
customer? Then you already enjoy
the benefit of our ‘guided, open
architecture’. That means that
you not only have access to ING’s
own funds, but also to a selection
of funds from AXA Investment
Managers, Blackrock, Amundi,
Franklin Templeton Investments
and NN Investment Partners.
‘Guided’ means that our funds
specialists select 60 funds from
a range of hundreds of funds.
This selection is suitable for
enabling private investors to
build up a diversified portfolio of
investments. Choosing is also easier
that way. Simple, isn’t it?
Do you invest within Private
Banking? Then your Private Banker
can suggest dozens of fund houses.
That way, you can diversify how you
invest a larger amount of capital, as
well as putting your own stamp on
your investing.
13
Will ‘sustainable investing’ become
known just as ‘investing’ in a few years?
There is every chance it will. For an
increasing number of investors, it is
not just financial return, but also the
ecological and social footprint of their
investing, that counts.
Impact investing: the essence of sustainable investing3
14
Impact investing: the essence of sustainable investing
When sustainable investing was still a
niche activity, you could only invest in
one of two ways: ‘green’ investments in
windmills, solar panels, recycling, and/
or by applying exclusion criteria. In the
ESGHowever, for several years now,
ESG has been the norm. That means
that you take into consideration
criteria in the area of ecology
(Environmental), society (Social) and
sound management (Governance).
This strategy concerns the interplay of
these three factors. They are certainly
inextricably intertwined. To bring it into
focus: you can invest in electric cars
(E), but if the manufacturer gets their
raw materials from mines that treat
their workers poorly (S), or bribes local
governments (G), then there’s no longer
a question of this being a sustainable
investment.
second approach, you exclude certain
controversial companies or sectors
from your portfolio. These can include
nuclear energy, coal, weapons, tobacco,
gambling, amongst others.
15
Impact investing: the essence of sustainable investing
Impact investingBit by bit, another trend is emerging:
impact investing. In impact investing,
you not only take ESG factors into
account, you also try to achieve an
actual impact. You aspire to, for example,
to create employment for vulnerable
groups through your investments.
Or, for every instalment that you invest,
a tree is planted. Investing in green bonds
is also a form of impact investing,
for example. With this type of investing,
your money is used to finance only
sustainable projects, such as energy-
efficient property, bicycle infrastructure,
wind farm construction, etc.
With impact investing you pursue not
only financial return, but also a return
for society and/or the environment.
Through your investing, you will be
helping to correct global warming and
social injustice. Impact investing is meant
for investors who want to get closer to
the essence of sustainability.
16
Impact investing: the essence of sustainable investing
Impact investing is (for now) still a
niche area. A diversified portfolio which
consists solely of impact investment
funds is not (yet) an option. Not only
because the offering is still relatively
narrow, but also because the options
for diversification are still quite limited.
Many of the impact investment funds
are exposed to a limited number of
sectors, such as energy and service
companies. Would you like to invest
in impact investment funds? Then your
best option is a diversified portfolio.
Once you have that foundation,
you can include a few impact
investment funds as a personal touch. Under the hoodIf you invest in an impact investment
fund (or in another investment fund), first
look under its hood with an
advisor. That way you can be sure
that the fund manager’s strategy also
matches your vision of sustainable
investing. Also ask whether the manager
is in dialogue with the companies
that he or she is a shareholder of. As a
shareholder, a manager can help decide
about the sustainable course that a
company follows, to an extent. Finally,
a sustainability label is often a good
indication of responsible investing.
17
Impact investing: the essence of sustainable investing
Sustainability is an umbrella term that can cover a vast array
of notions. Fund managers are able to define sustainability for
themselves, to a certain degree. That occasionally makes things
confusing for investors. That is why the Febelfin banking federation
has launched a sustainability label. An investment product receives
the label only if it fulfils specific criteria. The manager of the product
must submit information to Febelfin. The label has been given to
more than 300 funds to date. The ING’s range includes funds with
the Febelfin sustainability label.
The Febelfin sustainability label as an objective check
Impact investing: the essence of sustainable investing
18
Hundreds of studies indicate that sustainable investing yields an
equal or better return than classic investing. Specifically with regard
to impact investing, this kind of comparison is more difficult: these
investment funds usually invest in a limited number of themes and
do not reflect the entire economy (unlike diversified ESG funds).
Apples are difficult to compare with oranges. Moreover, impact
investing is a recent phenomenon and therefore no conclusions can
be drawn regarding long term performance.
More and more ING customers opt for sustainable investments.
At ING, you can also choose impact investing through dedicated
impact investment funds. Or you can select a sustainable fund of
funds consisting of diverse sustainable investment funds, including
impact investment funds.
Want to start a good conversation about investment? Our advisors
are happy to make time to explain the opportunities available to you.
What about the return on impact investing?
19
With a thematic fund, you can respond
to a specific theme like robotics, the
ageing demographic and climate
change. A themed fund can contain
different sectors. In this way a themed
fund can, for example, invest in the
pharmaceutical sector while it also
invests in healthcare sector property,
nutrition and insurance. Thematic
investing is increasingly prevailing
over sector investing in recent years.
Themed funds are popular because they
are very recognisable. Investing in a
themed fund based on green energy is
for many investors closer to their daily
experience than investing in a fund
that aims to out-perform the S&P 500.
Themed funds are attractive because
you can choose the areas that best
suit your identity or values. There is
a lot of choice available now, and more
funds are being created every day;
from healthy eating, mobility and
education to millennials, cybersecurity
and artificial intelligence.
Are we increasingly opting for thematic investing?4
20
Are we increasingly opting for thematic investing?
Themed funds are based on broad social
trends. A few of them are urbanisation,
technological development, the ageing
demographic, global warming and the
shift of economic power from the West
to the East. These are developments
that will play out over the long term.
A themed fund is far beyond hype.
SustainableToday, some themed funds also have
a sustainability quality mark. Thematic
investing contains a great deal of
sustainable alternatives including
water, education and healthy eating.
The Sustainable Development Goals
established by the United Nations are
often used as inspiration by managers
of themed funds.
21
Are we increasingly opting for thematic investing?
However attractive they may appear:
you must not forget to be sufficiently
diversified. Constructing your portfolio
exclusively from themed funds is risky. A
themed fund contains a concentration risk
because you are only investing in a limited
number of sectors. Moreover, investments
You can also invest in themed funds at ING.
Our managers offer a selection of themed
funds that are screened on a number of
different points.
• Contact an ING advisor
• Surf to ing.be/investors
in themed funds may be more volatile
than the market average. It is advisable to
have a strong core at the centre of your
portfolio made up of general investment
funds that invest broadly in the market.
You can then add a few themed funds to
it for a personal touch.
22
Are we increasingly opting for thematic investing?
Robotics fundIf you want to add themed funds to
your portfolio, you should first consider
(with an advisor) what the investment
fund contains. There are already dozens
of themed funds for robotics. But each
one uses a different definition of robotics
and different investment strategy. An
example? In each robotics fund you
will find digitalisation as a subtheme.
But one robotic fund will also invest
in artificial intelligence and/or data
storage, while another will not. The best
choice is a themed fund that does not
invest too much in just one niche. If that
one niche does not perform well in the
market, then the fund manager’s hands
are tied. So, ensure that the investment
fund has a sufficiently broad array of
investments, which is also aligned to
your own values.
23
Belgians are known for their ‘brick in
the belly’, or the urge to build. Home
ownership is a sensible choice:
you don’t pay rent and own something
which could rise in value. A sizeable
proportion of Belgians even have two
or three ‘bricks in their belly’. Aside from
their own home, many have bought
extra property (mainly in their own
country) for their own enjoyment,
or to rent out.
Sources: Lorenzo Van Der Vaeren, Investment Officer at ING, and Steven Trypsteen, Economist at ING.
Is Belgian property still attractive as an investment?*5
24
Is Belgian property still attractive as an investment?
Belgian propertyThe Belgian property market has
performed well for years. The number
of families has increased, as has the
number of smaller families. They all
obviously need a roof over their heads.
In addition, historically low interest
rates have persuaded many Belgians
to invest in property. For years now,
savings have returned almost nothing.
Interest rates for qualitative bonds are
also low, or sometimes even negative.
At the same time, low interest rates
for loans are attractive, which in
recent years has also made it easier to
borrow more money. Those factors -
in combination with factors including
income growth - have driven property
prices sky high.
• The elimination of the Flemish ‘own-and-only-home’ bonus.
• The introduction of the greenfield building ban in Flanders.
• Changes to the Flemish registration tax: there is now a uniform tariff for family homes of 7% (5 or 10% in the past).
• New rules from the National Bank: resulting in stricter lending requirements having to be met.
Although the appetite for property grew, there have been new challenges for the market over the last few years.
• The new renovation obligation for property owners: the EPC value of a home must be below a maximum of 100 by 2050.
• Another item which still might affect potential future conditions: the possible introduction of a tax on actual rental income (under pressure from Europe).
• ...
25
Is Belgian property still attractive as an investment?
Why to invest in property? On the one side, there are also forces
holding back the property market, such
as low interest rates and high demand.
On the other side, there are also issues
that can constrain the market, such as
changes to taxation. How interesting is
it then, in reality, to keep investing in
physical property?
If you exclude uncertainties like a
possible recession, you can expect
property prices to rise a bit in the
coming years. But the increase will be
more limited than in previous years.
More important than the possible added
value that property prices can create, is
to now look chiefly at potential rental
income. In other words: do not invest
in an extra house now in the hope of
being able to sell it for double the value
in five or ten years. If you want to invest
in physical property, it is best to do that
only with the objective of generating
long-term rental income.
26
Is Belgian property still attractive as an investment?
Risks Do not make any hasty decisions about
it. We regard property traditionally as
a very safe investment because it is
tangible. There are still, however, a great
many risks involved. A steep drop in
property prices, as we saw in Belgium
in 1980, is always a possible scenario.
You should take into account the
considerable amount of (maintenance)
costs associated with property. Many of
these costs are unpredictable. Moreover,
the risk of vacancy or payment default is
ever-present.
27
Is Belgian property still attractive as an investment?
5,9%According to the latest analyses (2019) by the National Bank
of Belgium, Belgian property is overvalued by 5.9%; according
to the International Monetary Fund (2019) the overvaluation
is 8%. So, while there is a limited overvaluation, the property
market is not overheating.
Is Belgian property overvalued?
28
Is Belgian property still attractive as an investment?
Investing in property is possible
by purchasing ‘bricks and mortar’.
An alternative is investing in listed
property.
A lot of businesses champion the
advantages of physical property.
This is certainly the case if you
are buying a house to use it as a
family home. But if you only want
to invest in physical property for
the potential return, then the
picture is a little more nuanced.
Investing in property on the market: a smart alternative?
Buying a house, garage, or student
residence to rent out, usually
means that you have to put a
large amount of money on the
table. Moreover, as an investor
you have a ‘concentration risk’:
you are putting your money in
just one building in one type of
property (residential, commercial,
student accommodation), and in
one particular location. You have
to go to the notary and possibly
agree a loan, and property
maintenance is also involved.
Additionally, you must invest time
in administration, find the right
people to rent the property, and
so on, and so on.
29
Is Belgian property still attractive as an investment?
By investing in listed property, you can avoid these issues:
• It can be done with smaller amounts of money.
• You can spread the investments over time.
• You can distribute the investment across different markets and types
of property (commercial, residential, etc.).
• You don’t have to go to a notary and you don’t need to arrange a loan.
• You don’t need to maintain the property and you will not be involved
in the practical administrative burdens of it.
30
Is Belgian property still attractive as an investment?
By investing in listed property, you
leave the management to experts
who strive to achieve maximum
return on their property portfolio.
For example, you can choose
to invest in an investment fund
that is comprised of European
property shares. In one fell swoop,
you will be invested in dozens or
even hundreds of property market
players spread right across Europe.
Moreover, the market for listed
property is broad, so you can, as
an investor, put your own stamp
on your investing. You could, for
example, focus your investing on
student residences, nursing home,
office buildings, logistics buildings,
Looking at a
(second) residence,
or would you
prefer to invest in
listed property?
Whatever property
plans you have,
at ING, advice is
always included.
etc. Finally, investing in listed
property has another advantage: if
you want to sell your investment,
it’s usually just a question of
pressing a button. Selling physical
property is a process that takes
much longer.
There are also trends in listed
property. Many investors are
passing on retail property (bricks
and mortar shops), whereas
logistics property (e-commerce)
and healthcare property are
popular. Trends come and go,
however. That is why it is always
important to be sufficiently
diversified in your property
investments.
31
Choosing investments that suit your situation, needs
and goals? At ING we’re happy to take time to assist
you. Online, by telephone or in one of our branches.
Investing at ING? You have four good reasons to do so.
1. Guided, open architectureING operates a guided ‘open architecture’. That
means that the bank offers solutions not only
from its own bank, but also from other financial
institutions and fund houses. Read more about this
on page 12.
2. Expertise and advice ING has an in-house team of dozens of economists
and investment experts who follow the markets and
the economy around the world and around the clock.
New investor or veteran investor? The ING advisors
translate their expertise into the language that you
speak and recommend the solutions that suit your
unique situation.
3. Performance and returnYou will benefit from high quality solutions that are
in line with our investment strategy.
4. Sustainable approachAt ING you can invest in carefully selected
sustainable funds, including a few with the Febelfin
sustainability label. In addition, ING also imposes
its own restrictions. The bank does not invest in
companies whose products or services have a
negative effect on people, the environment and
society. ING does invest in companies that stand
apart from other companies in their sector due to
their sustainable policy.
Investing in the world of tomorrow... starts today
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