EUROPE - Finding the right growth strategies in the current environment is a challenge, according to Rabobank-owned asset manager Robeco.
Henk Grootveld, head of thematic investment at Robeco, said: "After decades where value investing was the driver, we are now in a phase of growth investing. The question is how you can grow the top line."
Grootveld said this could be done by investing in emerging markets or the merger and acquisition market.
A less risky growth approach, he added, would be to invest in companies selling to emerging markets.
"If you can combine top-line growth with exports and dividend growth, it is a good strategy," Grootveld said.
He said Robeco sought out investment opportunities such as uranium following the 30% drop in uranium prices in the wake of the Japanese nuclear disaster, or deepwater oil-linked investments in companies such as Cameron and Transocean following the BP Macondo well blowout.
Peter Csoregh, natural resources fund manager at Robeco, said: "We watch changes in the economy and ask ourselves where the next demand is going to come from."
According to Grootveld, the biggest demand by institutional investors is for global consumer trend investments.
"It is a broad sector," he told IPE. "Agriculture, smart and renewable energy are all too niche and high risk for institutional investors. Benchmarks are reflecting the past - but we are looking at the future. Investors are becoming more comfortable with investing in themes."
The difficult pursuit of growth is also a concern for Hermes Global Equities Advisors.
John Chisholm, founding principal and institutional portfolio manager at Hermes Global Equities Advisors in Boston, said active global equity mandates were one way to capture outperformance.
"The growth areas are not as prevalent or obvious this year," he said. "Given that we are further in the recovery, it is a narrower group of companies that produce organic top-line growth.
"The fact organic growth is more difficult to identify compared with the big themes last year is partly reflected in the lack of conviction, together with continued sovereign risks."
Chisholm said there was "room for growth in every single sector" and that Hermes even saw stock divergence in the same sector.
"Therefore, it is more important to select companies based on their characteristics rather than on their theme or size," he said.
"Pension funds are currently undertaking some de-risking, but, given their funding requirements, they also need to seek some alpha - and with selective, active global equity investments, you can add significant value."
The biggest challenge for him is the return of volatility to the markets, particular currency volatility.