How Close Can You Go #3 – Lukas Daalder, Chief Investment Officer Robeco Investment Solutions
A new month means a new interview. As you may have read on my personal editor profile, my interests lie within anything with respect to investments, especially investment banking. By interviewing Lukas Daalder, Chief Investment Officer of Robeco Investment Solutions, I am in the perfect place.
Robeco is an international asset manager offering an extensive range of active investments, from equities to bonds. Research lies at the heart of everything they do, with a ‘pioneering but cautious’ approach that has been in their DNA since our foundation in Rotterdam in 1929. Robeco believes strongly in sustainability investing, quantitative techniques and constant innovation. Today, Robeco is a subsidiary of Robeco Group, which is the centre of asset management expertise for ORIX Corporation, Robeco Group’s majority shareholder based in Tokyo, Japan.
Lukas studied monetary economics, macroeconomics, and international relations at the University of Amsterdam. During his study, he interned at the Dutch Central Bank, worked as Research Assistant at the Faculty of Economics and Econometrics at the University of Amsterdam, and was even an editor of Rostra! After graduating, he started working as Economist at Rabobank Group. He analysed the country risk of the sub-Sahara. Why this region? Because he knew nothing about it, and that was what interested him. Lukas went to the dealing room where he worked together with Bernard Walschots (now, Chief Executive Officer of Rabobank Pension Fund) as Senior Strategists. Analysing capital markets, looking for which bond is more profitable than another, and communicating this data to the traders was the daily job. He also gave Presentations for the national and international institutional clients of Rabobank, such as Central Banks, to discuss their vision on markets. During the mid-nineties, Lukas concluded that equities were far more interesting than bonds, and decided to make a move to a small broker in Amsterdam where he fulfilled the function as Equity Strategist. After working here for three years, equity markets decreased and Lukas moved to Bank Oyens & van Eeghen as Head of Research. Because of his extensive knowledge of dividend risk, Lukas was asked to work in the dealing room for International Marketmakers Combination, also known as IMC. After performing research in the dividend risk of IMC, he performed some market making activities as well. Lehman Brothers, which was the main business partner for the market Lukas worked in, declared bankruptcy, and therefor Lukas became unemployed for the first time in his life. That is where his career at Robeco started, and several years later, Lukas became Chief Investment Officer.
After a small summary of Lukas Daalder, I asked him about the environment in the dealing room of IMC to compare this with my previous interview with Mark Schilstra. “It was a kind of survival of the fittest. Back then, they were hiring like twelve people a year, and of these twelve people, you knew for sure that after one year, you were left with only six, and after two years, you were left with only three. If you were good enough, you could stay, if not, you were fired. Sometimes you realised that you have not seen someone for a couple of weeks. That was because someone just disappeared. If you were fired, you could not walk back to your computer and finish the day because of all the access to the investment systems. It was a strange world.”
It is very well known that, especially in these years, the compensation schemes were good, very good. How about it? “What was typical about IMC, was that every employee had the same fixed salary, even your manager. Everything was based upon the performance bonus you received. If you performed good, you were compensated more than enough. The good side of this is that the firm could survive years of economic uncertainty because of the low fixed wages. During this period, HFT trading came from the ground and was implemented in IMC. Investment strategies were born and the computer did the job.”
You were saying that the people of IMC were very good. That may be because of the recruitment process. What are the people you are looking for at Robeco? “First of all, I think it is really hard to understand the person you are dealing with on the basis of looking into his CV. What I am looking for is people that have several interests. That could be people who have a successful history in sports, people who speak five languages, or other extraordinary interests. For example, I have someone in my team that knows everything about birds. Ask them anything about it, and he will know the answer. I think that is special and diverse. Last year, I did a guest lecture at the Erasmus University. After the lecture the professor mentioned that the exam was in two weeks. Two students raised their hands and asked if the exam could be on another day because their CFA exam was also planned on that day. I mean, it is impressive that you are also studying for your CFA exam beside your normal study, but I also think that you have to live. You are studying Economics, which is more than enough to prepare yourself for your career in my opinion, and then you are also doing a CFA. In that case, I would choose someone who have a more diverse background with a similar workload over such a person who is studying all day, graduating cum laude, but have not seen anything else of the world beside his or her own university. Of course, these backgrounds could also be in your work field, like economics for example, but students should not be ‘locked up’ in their own study.”
Okay, we are now at the point that you are hired as a young professional. What is next? More precisely, why did you became Chief Investment Officer and someone else not? “Well firstly, you need to have a different perspective of why you are working here. Theoretically, I am an employee of Robeco, but for me, I am an employee of myself. Before I start, I set specific goals, the quality of my work for example, and these goals are mainly much more ambitious than the goals that I have been set by Robeco itself. Secondly, during the years, I have gained some reputation. I have set up my own blog where I daily post ‘the best of the web’. This consist of graphs, tables, and all other financial data with is topical at that moment. Think about bond markets, elections, or economic development. Earlier, I mailed these kind of data to my colleagues so everyone was prepared to discuss this, but after all I noticed that many more people were interested in it, so I started this blog. In this way, people start to remember your name, and get an impression of you as a person. This was never the purpose of doing this, but it is one of the main reasons why I am in this position today. After a couple of years, I organised an open drink to discuss these actualities with people that were interested in my content. Eventually, even journalists of RTL Z and the Dutch Financial Times joined my drink, where I am also a columnist nowadays.”
So, you have a lot of things going on in your life. Your own blog, Chief Investment Officer of one of the biggest asset managers in the Netherlands and also a columnist for RTL Z and the Dutch FD. What are your days like? “I wake up at 5.30 AM, then I search all over the internet for interesting topics and publish this at my blog. I catch the train at 6.30 AM and start working at 7:15 till 5 PM, but continue to work in the train on the way back. So, I am working for about thirteen hours and I am home for the remaining hours in the day. I also like running (I run for about thirty or forty kilometer a week) and also spending time with my children is very important for me. Also, some weeks exists of traveling. For example, last week I went to Australia for a business trip. That is nice, but also very exhausting. During my flight to Australia, it was my birthday. Then you are toasting with yourself in a plane ten thousand feet high. That is the other side of these trips.”
Tip from the editor: Not to do any advertising, but I think it is, for us as economics students, very interesting to subscribe to Lukas Daalder’s blog. I did it myself, and every morning, I read these updates with a big interest. You could subscribe yourself for free by going to lukasdaalder.com