RobecoSAM Sustainable Water Equities I USD

Dieter Küffer is the Cluster Head of the Thematic Investing team covering Water/Healthy Living/Biodiversity/Circular Economy. He has been Portfolio Manager for the RobecoSAM Sustainable Water Equities strategy since inception of the strategy in 2001, the year he joined Robeco. In the past, he has also managed several other thematic strategies at Robeco. Prior to joining, he led a team responsible for the management of actively managed equity mandates on behalf of Swiss institutional clients at UBS Asset Management in Zurich. He began his career as an investment counsel in the Private Banking Division of UBS in 1986. Dieter Küffer holds a federal diploma as a Swiss-Certified Banking Expert and is a CFA® charterholder. Amy Wanner-Thavornsuk is Co-Portfolio Manager of RobecoSAM Sustainable Water Equities strategy and also covering thematic research within the Thematic Investing Water/Healthy Living/Circular Economy/Biodiversity team. Prior to joining in 2019, she worked for 9 years at JPMorgan Assets Management in London, whereof 6.5 years in the same role covering emerging market equities. She has been in the Financial Industry for almost 15 years with previous work experience in investment banking and consulting. She started her career as an auditor at PWC in Bangkok back in 2003. Amy holds an BS in Finance & Accounting from the Chulalongkorn University in Thailand and an MBA from the Bayes Business school, UK. She 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 0.01% 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.

Investors who are not subject to (exempt from) Dutch corporate-income tax (e.g. pension funds) are not taxed on the achieved result. Investors who are subject to Dutch corporate-income tax can be taxed for the result achieved on their investment in the fund. Dutch bodies that are subject to corporate-income tax are obligated to declare interest and dividend income, as well as capital gains in their tax return. Investors residing outside the Netherlands are subject to their respective national tax regime applying to foreign investment funds. We advise individual 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's sustainable investment objective is to help mitigate the global challenges related to scarcity, quality, and allocation of water. Water and sustainability considerations are incorporated in the investment process by the means of a target universe definition, exclusions, ESG integration, and voting. The fund only invests in companies that have a significant thematic fit as per Robeco's thematic universe methodology. Through screening on both Robeco's internally developed SDG Framework and Robeco’s exclusion policy, the fund does not invest in issuers that have a negative impact on the SDGs, are in breach of international norms or where products have been deemed controversial. Financially material ESG factors are integrated in the bottom-up fundamental investment analysis to assess existing and potential ESG risks and opportunities. The integration of ESG factors in the investment analysis does not have a sustainability indicator. 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.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 World Index TRN.

Global equity markets measured by the MSCI World Index were in negative territory. Only certain utility names ended the month positively, while the rest of the whole index was deep in the red. Small-cap and mid-cap stocks underperformed large-cap stocks quite significantly. Equity markets seem to behave irrationally compared to fundamentals. In the water sector, many companies reported strong results (particularly in water-related businesses) for Q3. Many mentioned that their investments in water infrastructure continue to grow, including renovating aging water infrastructure and adopting technology that increases performance and efficiency. A key driver is ongoing funding by both public and private segments. Companies that participate in these water areas showed good growth, which helped offset weakness in other businesses. We also observed that there is a rising number of cases globally where poor water quality or pollution in surface water were found. In response, regulations are becoming more stringent, and are placing more and more focus on wastewater treatment and drinking water quality. This continues to be an important area in which we invest.

Based on transaction prices, the fund's return was -6.49%. Most clusters ended the month in negative territory. Utilities was the best-performing one, driven by UK utilities as the sector has made progress in submitting proposals for the next AMP (Asset Management Plan). The fund has an overweight in two of the three listed companies. In Construction & Materials, A.O. Smith and Core & Main stood out. The latter has benefited from increasing investment in water infrastructure. European names underperformed given the negative macro backdrop. In Capital Goods & Chemicals, Lindsay was a positive highlight. This is a new position this year, which we added after the significant decline of agriculture stocks. Despite holding a small position in the fund, shares in Energy Recovery, a leading supplier of energy recovery equipment for the desalination industry, declined sharply after the announcement of its CEO change. In Quality and Analytics, water analytics underwent a pullback, as most companies lowered their expectations of demand recovery. The subcluster shows very attractive valuations in our water universe and still possesses a long-term growth trajectory in the water quality theme as well as other parts of their businesses.

The fund remains overweight in Analytical Equipment and Building Materials, given fundamental growth opportunities and valuation. In Building Materials we prefer to focus on infrastructure-related companies and housing-related companies with high exposure to renovation and retrofitting. The fund is underweight in US and Brazilian water utilities.