Robeco Sustainable European Stars Equities Z EUR

Mathias Büeler is Head of Sustainable European Equities and Portfolio Manager for the Robeco Sustainable European Stars Equities strategy, as well as serving as a equity analyst covering the Financials, Real Estate, and Consumer Discretionary Sector. Prior to joining in 2011, Mathias worked as a sell-side equity analyst at Kepler Capital Markets for more than four years, covering Swiss banks and diversified financials. Previously, he was Head of Product Management Structured Products at Man Investments for two and a half years, where he started his career in 2004. Mathias holds a Master of Arts majoring in Business Administration from the University of Zurich and is a CFA® Charterholder. Oliver Girakhou is Portfolio Manager of Robeco Sustainable European Stars Equities strategy. He covers and leads the research in the Materials, Industrials Energy and Utilities industries within the Team. Prior to joining Robeco in 2014, he spent 6 years at Credit Agricole – Cheuvreux (later KeplerCheuvreux) as a sell-side equity analyst covering European industrial companies. He also gained first-hand business experience as an business analyst at the BMW Group where he worked in the China Strategy Department and he started his career in 2008. Oliver earned his Master in Social and Economic Science from Vienna University’s School of Economics and Business Administration, and his MBA from ESCP Europe.

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 via exclusions, negative screening, ESG integration, ESG and environmental footprint targets, 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. In addition, a negative screen is used to exclude the 20% worst ESG scoring stocks from the investable universe. Financially material ESG factors are integrated in the bottom-up fundamental investment analysis to assess existing and potential ESG risks and opportunities. In the stock selection the fund limits exposure to elevated sustainability risks. The fund also targets a better ESG score and at least 20% lower carbon, water and waste footprints compared to the reference index. In addition, where a stock issuer is flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to exclusion. Lastly, the fund makes use of shareholder rights and applies proxy voting in accordance with Robeco's proxy voting policy.

In February, the MSCI Europe gained 1.8%, driven by resilient activity data. From a sector perspective, energy and communications experienced returns in excess of 5%, while technology, real estate and materials fell. Performance of cyclical sectors is partially backed by improving PMI numbers and the China reopening being on track. The current earnings season is looking like another good quarter, with the best EPS trends interestingly coming from financials, communication services and energy, when assessing both the breadth and size of EPS beats. However, when looking at cyclical sectors such as industrials, materials and consumer discretionary, earnings trends looked weaker, putting a question mark on the sustainability of the strong rally year-to-date. The impact of much higher rates on the economy continues to be one of the biggest worries. For now, it seems that households can still rely on elevated excess savings and a tight labor market. On the corporate side, companies do not face a very steep refinancing wall yet. However, if higher rates persist into 2024, credit may become a bigger issue, given the increase in refinancing needs.

Based on transaction prices, the fund's return was 2.40%. The fund gained roughly 2.4% in February and outperformed the MSCI Europe by 60 bps. The outperformance was mainly driven by strong selection in materials, consumer discretionary and consumer staples, and our underweight in communications services. Our large underweight in energy contributed negatively to the relative performance. The fund's outperformance in the materials sector was led by industrial gases company Linde, which yet again delivered strong results on the back of rock-solid execution and pricing power. German specialty lubricant manufacturer, Fuchs Group contributed nicely on the back of falling raw material input prices. In consumer discretionary, the fund benefited from strong performance in kitchen appliances maker SEB Group (up +14% in absolute terms). On the other side, the fund's underweight in the energy sector detracted from the relative return, as the strong sector performance was driven by still tight supply and improving demand dynamics.

The fund's strategy aims to make investments in high-quality companies with sustainable, differentiated business models taking a full-cycle view. Given that approach, we'd expect the fund to show its full strength when returns of individual stocks start to materially differ due to less overall market support. The fund's positions tend to be less driven by assumptions on general market trends, but much more by company-specific qualities that are likely to endure in both positive and negative environments. Driven by expected business resilience and comparably moderate valuations, our key convictions can give some comfort in volatile times.