Robeco Emerging Stars Equities DL USD

Jaap van der Hart is the Lead Portfolio Manager of Robeco’s High Conviction Emerging Stars strategy. Over time, he has been responsible for the investments in South America, Eastern Europe, South Africa, Mexico, China and Taiwan. He also coordinates the country allocation process. He started his career in the investment industry in 1994 at Robeco's Quantitative Research department and moved to the Emerging Markets Equity team in 2000. Jaap holds a Master's in Econometrics from Erasmus University Rotterdam. He has published several academic articles on stock selection in emerging markets. Karnail Sangha is a Portfolio Manager within the Emerging Markets Equity team and provides analytical research coverage on India. He is Co-Portfolio Manager for the Emerging Stars and Sustainable Emerging Stars Equity strategies. Prior to joining Robeco in 2000, Karnail was a Risk Manager/Controller at Aegon Asset Management where he started his career in the industry in 1999. He holds a Master's in Economics from Erasmus University Rotterdam and is a CFA® charterholder. Karnail is also fluent in Hindi and Punjabi.

The fund is established in Luxembourg and is subject to the Luxembourg tax laws and regulations. The fund is not liable to pay any corporation, income, dividend or capital gains tax in Luxembourg. The fund is subject to an annual subscription tax ('tax d'abonnement') in Luxembourg, which amounts to 0.05% of the net asset value of the fund. This tax is included in the net asset value of the fund. The fund can in principle use the Luxembourg treaty network to partially recover any withholding tax on its income.

The fiscal consequences of investing in this fund depend on the investor's personal situation. For private investors in the Netherlands real interest and dividend income or capital gains received on their investments are not relevant for tax purposes. Each year investors pay income tax on the value of their net assets as at 1 January if and inasmuch as such net assets exceed the investor’s tax-free allowance. Any amount invested in the fund forms part of the investor's net assets. Private investors who are resident outside the Netherlands will not be taxed in the Netherlands on their investments in the fund. However, such investors may be taxed in their country of residence on any income from an investment in this fund based on the applicable national fiscal laws. Other fiscal rules apply to legal entities or professional investors. We advise investors to consult their financial or tax adviser about the tax consequences of an investment in this fund in their specific circumstances before deciding to invest in the fund.

The fund incorporates sustainability in the investment process through exclusions, ESG integration, engagement and voting. The fund does not invest in issuers that are in breach of international norms or where activities have been deemed detrimental to society following Robeco's exclusion policy. Financially material ESG factors are integrated in the bottom-up investment analysis to assess existing and potential ESG risks and opportunities. In the stock selection the fund limits exposure to elevated sustainability risks. In addition, where a stock issuer is flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement. Lastly, the fund makes use of shareholder rights and applies proxy voting in accordance with Robeco's proxy voting policy.

In July, emerging markets increased 5.1% (EUR), thereby outperforming their developed counterparts, which increased 2.3% (EUR). Positive soundbites from China lifted sentiment and drove the markets in general. Regulatory scrutiny on the large internet-based platforms seems to be ending in China, while more support and pledges to restore the health of the property sector were well received. Further comments on boosting consumer confidence and solving the local government debt issue also supported the Chinese market. General sentiment was further supported by the better-than-expected economic numbers in the US (especially inflation-related), increasing the odds that the Fed is nearing the end of its rate-hike cycle. Countries that performed strongly in July were China, Malaysia, South Africa and Turkey. Markets that lagged were Hungary, India, Indonesia, Saudi Arabia and Taiwan. Crude oil prices moved up in July on reports of Saudi Arabia extending a voluntary output cut in August. Inflows into EM equity funds in July crossed the USD 2 billion, from under USD 1 billion in June. Cumulative flows into EM equity funds are nearing almost US 40 billion year-to-date.

Based on transaction prices, the fund's return was 4.09%. In July, the fund underperformed the MSCI Emerging Markets Index. Country allocation was slightly positive in July, while stock selection was the detractor from the overall performance. Positive country allocation results came from India, Saudi Arabia (both underweight), Vietnam and South Africa (overweight). Negative country allocation came from China (underweight) and Hungary (overweight). Stocks that did relatively well in July were to be found in China, where Alibaba (e-commerce), Vipshop (online retailer) and Ping An (insurance) did well. Wiwynn, the Taiwanese cloud storage solutions provider, had a strong share price run on the back of increased demand for AI-cloud demand. Naspers (South African internet-holding company), Vinhomes (Vietnamese property developer) and Grupo Banorte (Mexican bank) also did well in July. Stocks detracting from performance were to be found in South Korea, where Kia Motors, LG Electronics and Samsung Electronics underperformed. The Taiwanese technology names TSMC and Macronix (memory) also underperformed. HCL Technologies, the India-based IT software solutions provider, reported numbers that were weak in terms of new order intake.

The global environment is still challenging for equity markets, as inflation remains relatively high and global central banks have continued to raise interest rates. This has led to financial stress for some European and US banks, and global growth is likely to slow down. Emerging markets, however, seem relatively well positioned, as inflation is actually lower in many countries, they were earlier in hiking interest rates in this cycle and growth in China is picking up after the end of the zero-Covid policy. After last year's correction, market valuations have become more attractive. Emerging markets in particular are attractively valued relative to developed markets, with discounts of around 30% based on earnings multiples.