investing in the world of tomorrow...investing can potentially earn a higher yield than savings. you...

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


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


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


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

http://ing.be/investors

https://www.ing.be/en/retail/daily-banking/current-accounts/make-an-appointment

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




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 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 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


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


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


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


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


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


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


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


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


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


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


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

Want to have a good chat about investments?

Make an appointment now with an ING advisor.


investing in the world of tomorrow...investing can potentially earn a higher yield than savings. you...

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