EUROPE - Rabobank subsidiary Robeco is bracing itself for tougher times despite positive half-year results.

The Dutch asset manager managed to attract €4.9bn in new client money in the first six months of 2011, €2.3bn of which was institutional money.

Just a year ago, the firm reported an outflow of institutional money over the same time period.

The capital has come in from all regions - the Americas, Europe and Asia - and flown into various investment capabilities.

Its net income rose from €43m in the previous year's first six months to €100m.

Operational income, meanwhile, increased from €77m in the first half year of 2010 to €136m in the first half year of 2011.

Returns on products were overall favourable, with equities generating 8-9% and fixed income 1-3%, depending on the individually selected strategy and currencies.

However, since then, equities have nosedived.

Roderick Munsters, chief executive at Robeco Group, told IPE: "Because of the selloff in recent weeks, if markets remain as they are, asset levels will be lower than we expected them to be this year. This is likely to feed into next year's revenue numbers and makes it even more important to have costs under control.

"We have spent a lot of time and effort on controlling costs, but there is no time to relax. On the other hand, if you are robust enough as a company, there is also room for growth, room to selectively invest and hire people and to grow from a longer-term perspective."

If investors mark their liabilities and assets to market, Munsters added, their solvency ratios "look bad" because assets have fallen and liabilities risen.

"The question, of course, is whether investors will be able to maintain their risk budget or shy away from taking risk," he said. "In the Netherlands, it seems people tend to take a bit more of a longer-term view than they used to in 2008."

Robeco's most popular products for institutional investors this year have been its conservative equity strategy - a low-volatility approach of investing in equities - and emerging markets.

Munsters said: "Due to recent market events, we expect a lot more client interest in the conservative equity strategy. We also think China will get its inflation issues under control, which is why, from a long-term perspective, we continue to advocate a sizeable allocation toward emerging markets."

Investors continue to see certain fixed income as a safe haven, and thus Robeco has been able to sell low rates on German, Swiss and Dutch government bonds.

But despite ongoing interest in alternatives, investors are not increasing their current allocation to niche strategies, preferring instead to remain invested in equities and bonds.

Munsters said he expected market volatility to continue.

"Everything is having difficulties at the moment," he said. "Markets will continue to trade sideways, but we do not expect a further selloff from current levels. Instead, from a long-term perspective, selectively current levels can provide attractive opportunities."

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