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.The following sections display the ESG-metrics for this fund along with short descriptions. For more information please visit the sustainability-related disclosures.The index used for all sustainability visuals is based on MSCI Emerging Markets Index (Net Return, USD).

In October, emerging markets declined 3.73% (EUR), thereby underperforming developed markets, which declined 2.74% (EUR). Sentiment in October was negative overall, caused by the US 10-year bond yields rising to 5%. The continued challenges in China's property sector did not help either. The largest contributor to EM's negative performance remained mainland China, followed by South Korea and Taiwan. Crude oil prices went down by more than 8%, while natural gas prices shot up 22% on increased supply concerns due to the recent tensions in the Middle East. Most of the EM currencies weakened against the strong US dollar in October, with the Mexican peso and the Turkish lira as the biggest losers. The Polish zloty was the biggest gainer, with an appreciation of almost 4%, on the back of a more pro-EU election outcome in the country. The Polish equity market was by far the best-performing one. Other countries that performed well in October were Greece, the Czech Republic and Hungary. In October, EM equity funds continued to see outflows to the tune of almost USD 9 billion, bringing the cumulative inflows for 2023 to below USD 14 billion.

Based on transaction prices, the fund's return was -4.16%. In October, the fund underperformed the MSCI Emerging Markets Index. The underperformance was driven by both country allocation and stock selection. Negative country allocation was driven by Taiwan (underweight), South Korea (overweight) and Malaysia (underweight). Positive country allocation was driven by Hungary (overweight), Turkey (underweight) and Poland (overweight). In terms of stock selection, selected banks in the fund performed strongly, with Alpha Bank (Greece), OTP Bank (Hungary), Kasikornbank (Thailand) and Grupo Banorte (Mexico) up strongly in October. PTT, the leading energy player in Thailand, did well last month. KGHM, a copper producer based in Poland, also outperformed in October. Stocks that lagged in October were to be found in China, where Baidu (internet search engine), Alibaba (e-commerce), Vipshop (online retailer), PICC P&C (general insurance), Haier Electronics (home appliances), Ping An (life insurance) and Xinyi Solar (solar panels) underperformed. Other stocks that lagged in October were Emaar Properties (UAE), Sendas Distribuidora (Brazilian hypermarkets), Hana Financial (South Korea), LG Chemicals (South Korea) and Macronix (Taiwanese memory).

The global environment is still challenging for equity markets, as inflation remains relatively high, global central banks have continued to raise interest rates and risks for global growth remain. Emerging markets, however, seem relatively well positioned. Inflation is actually lower in many countries, and there is more room for interest rate cuts due to a more aggressive hiking cycle in the past years. Brazil and some other Latin American countries have already started to cut rates. Growth in emerging markets is holding up relatively well. In China, although the property sector remains weak, there is still a post-Covid recovery and the economy is growing by around 5%. 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. Earnings growth this year has disappointed, but should recover next year, with 18% growth expected.