Robeco Sustainable Asian Stars Equities FL USD

Vicki Chi is Portfolio Manager in the Asia Pacific team with a focus on Taiwan and China. Prior to joining this team in 2014, she was an Analyst in the Robeco Emerging Markets team where she covered Chinese stocks in the telecom and banking sector. Vicki started her career in 2006 at Robeco. She is a native speaker of Mandarin Chinese and holds a Master’s in Business Administration from Erasmus University Rotterdam. She also is a CFA® charterholder. Joshua Crabb is Lead Portfolio Manager and Head of Asia Pacific Equities. Before joining Robeco in 2018, Joshua was Head of Asian Equities at Old Mutual and Portfolio Manager at BlackRock and Prudential in Hong Kong. He started his career in the investment industry as Sector Analyst at BT Financial Group in 1996. Joshua holds a Bachelor's with Honors in Finance from the University of Western Australia and he is a CFA® charterholder.

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, 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. Financially material ESG factors are integrated in the bottom-up fundamental investment analysis to assess existing and potential (long-term) 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.

Starting the year with animal spirits roaring back, Asian markets rose 8.2% in January, outperforming the MSCI World (+7.1%) for the third month in a row. Bond yields retreated with the 10-year US Treasury yield declining 37 bps to 3.5%, as views of accelerated disinflation drove up expectations for an end to the hiking cycle, leading to a rebound in growth stocks. China's pace of reopening was faster than anticipated, with robust CNY data and no resurgence in infections as was feared. Apart from China (MSCI China +11.7%, CSI 300 +9.6%), South Korea (+12.1%) and Taiwan (+12.6%) also gained, driven by a rebound in the tech sector, where valuations already discounted the significant slowdown in the sector. India (-2.8%) was the weakest market in January, dragged down by banking sector weakness and Adani stocks following accusations from short seller Hindenburg Research.

Based on transaction prices, the fund's return was 8.87%. In January, Robeco Sustainable Asian Stars outperformed the index, driven by stock selection and country allocation. The low weight in India worked well this month. Within India, the IT sector went up against the overall weakness of the market, while banks faced a sell-off. In South Korea and Hong Kong stock selection also contributed positively. In terms of sectors, consumer discretionary and utilities performed the best, while healthcare and communication services detracted. On the positive side, Alibaba rallied sharply after initially lagging the recovery in the China/Hong Kong markets. Tech-enabling companies in the region recovered along with the Nasdaq. In our portfolio SK hynix and Sino-American Silicon benefited. In contrast, our Indian bank exposure ICICI Bank detracted this month on investor fears of contagion from the Adani rout. Based on current disclosures, ICICI Bank has very little exposure to Adani Group companies. Bank Rakyat in Indonesia also detracted despite good results. The low weight in Taiwan Semiconductor Manufacturing Company detracted this month, which was more than compensated by our high active weight in SK hynix and Sino-American Silicon.

Asian markets came back into favor as China abandoned its zero-Covid policy. The first rally off the low saw many heavily shorted stocks with weak earnings prospects outperforming in China. While we are positioned for reopening, we select companies with a solid business model that can deliver stronger earnings recovery into next year. Although with global growth slowing there will be mounting earnings risks, the sounder fiscal and monetary policy that has been adopted in Asia should make markets more resilient than in the past. A trip to ASEAN recently confirmed that investment and growth continue to be robust, despite some inflationary pressures, especially in Indonesia. Concerns over growth are likely to remain in cyclical sectors such as tech hardware, but asset-based valuations are getting closer to a trough and this should provide a floor. The recent market rout surrounding Adani Group companies highlights the importance of incorporating corporate governance analysis into valuations of emerging market companies. India remains a good long-term story, but we remain selective and disciplined with our value approach.