RobecoSAM Sustainable Healthy Living Equities Z USD

David Kägi is Portfolio Manager of the RobecoSAM Sustainable Healthy Living Equities strategy. Before joining Robeco in 2019, he worked as a Buy-Side analyst covering the global healthcare sector for Bank J. Safra Sarasin in Zurich, first for Private Banking, then for Asset Management. There, he also managed the Demography Health basket certificate for Bank J. Safra Sarasin. After some years in biomedical research following his PhD, he started his career in the financial industry in 1999 as a Healthcare Analyst at the investment company BT&T, followed by a position as an Investment Analyst for private biotechnology companies with Schweizerhall Management AG in Zurich. David holds a Master in Biochemistry and a PhD in T-cell Immunology both from the ETH Zurich.

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’s sustainable investment objective is to promote good health and well-being and contributing to an efficient healthcare system. Healthy living 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. 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.

Global equity markets continued their upward path in the first month of the second half of the year, with most major market indices (with the exception of Japan's Nikkei) ending the month in the green. Market sentiment was elevated by many investors increasingly pricing in a soft landing of the US economy. In the US, inflation has slowed, while employment numbers remain very high – a picture still very much aligned with the scenario of a soft landing. Also, given that inflation is still somewhat above the US Fed's target rate of 2%, hopes for the Fed already starting to cut rates in the current year are probably premature. A number of weak data points were reported for the Chinese economy, which led to hopes that some economic stimulus measures could be announced soon in order to avoid the country falling into a phase of deflation. The outperformance of the global IT sector came to an end in July. Market breadth increased significantly, with all market sectors performing positively. The Materials sector outperformed the broad global markets, while the Consumer Discretionary, Consumer Staples and Healthcare sectors underperformed in July.

Based on transaction prices, the fund's return was 2.47%. In July, the Healthy Living strategy yielded a positive return above its investible universe but lagged the broad global market benchmark. This can be explained by the underperformance of the consumer discretionary, consumer staples and healthcare sectors against the broad global markets. In the portfolio, the Healthy Lifestyles cluster performed best, followed by the Healthcare Efficiency and Therapeutics clusters. Healthy Nutrition was the only cluster which ended the month in negative territory. On an individual stock level, the biggest positive contribution came from personal care company L'Occitane. The company reported accelerating growth, driven by the Sol de Janeiro and ELEMIS brands and the recovery in China. In addition, the share price received a sizeable push from the announcement by its controlling shareholder and chairman that he may try to take L'Occitane private. The largest negative contribution stemmed from the large catering company Compass Group. After a solid stock price increase in the first half of the year, investors decided to take some profit in response to just in-line results.

The risks to economic growth have increased due to inflation, rate increases by central banks, geopolitical tensions and a slower recovery in China. We expect the global economy to weaken in the course of 2023. It will therefore be even more important to focus on solid business fundamentals, pricing power and quality. We remain constructive on the mid to long-term potential of the equity markets and are making use of current market conditions to further solidify our positions in companies that have very strong long-term business prospects. The pandemic has accelerated changes necessary to build more robust and sustainable economies. It has also made individuals more inclined to adopt a healthier lifestyle. The Healthy Living portfolio of sustainable companies is well positioned to benefit from these changes in the longer run.