Robeco Sustainable Global Stars Equities Fund

Michiel Plakman is Lead Portfolio Manager and member of the Global Equity team. He is responsible for fundamental global equities with a focus on SDG investing and on companies in information technology, real estate and portfolio construction. He has been in this role since 2009. Previously, he was responsible for managing the Robeco IT Equities fund within the TMT team. Prior to joining Robeco in 1999, he worked as a Portfolio Manager Japan at Achmea Global Investors (PVF Pensioenen). From 1995 to 1996 he was Portfolio Manager European Equities at KPN Pension Fund. He holds a Master's in Econometrics from Vrije Universiteit Amsterdam and he is a CFA® charterholder. Chris Berkouwer is Lead Portfolio Manager and member of the Global Equity team. He is responsible for fundamental global equities with a focus on the low-carbon transition and on companies in energy, materials and industrials, and portfolio construction. He joined Robeco in 2010. Prior to that, he worked as an analyst for the The Hague Centre for Strategic Studies. He conducted country, industry and company research for various equity teams prior to joining the Global Equity team. He a holds Master's in Business Administration and International Public Management from the Erasmus University Rotterdam.

The fund is established in the Netherlands. The fund is managed as a 'naamloze vennootschap' (public limited company). The fund has the status of 'fiscal investment institution' in the sense of article 28 of the Dutch Corporate-Income Tax Act 1969, and, as such, is taxed at a corporate-income tax rate of 0%.The fund is obliged to pay out the realized current income in the form of dividend within 8 months after the end of the financial year. From 1 January 2007 the fund withholds Dutch dividend tax at a rate of 15% from these dividend payments. The fund can in principle use the Dutch treaty network to partially recover any withholding tax on its income.

For private investors residing in the Netherlands real interest and dividend income or capital gains received on their investments are not relevant for tax purposes. Participating units held by private investors who are taxpayers in the Netherlands belong in Box 3. If and insofar as an investor's net assets exceed the net wealth exemption limit, said investor is liable from 1 January to pay 1.2% annually on the balance of his or her net assets. Investors residing in the Netherlands may offset the Dutch dividend tax withheld (15% as at 1 January 2007) against their income-tax payment. Investors who are not subject to (exempt from) Dutch corporate-income tax (e.g. pension funds) are not taxed on the achieved result. Dutch tax-exempt bodies may seek a full refund on the 15% dividend tax withheld on dividends (25% prior to 1 January 2007). Interest income is exempt from tax withheld at source. 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 in their tax return. In principle, Dutch bodies that are subject to corporate-income tax may offset the 15% dividend tax withheld on dividends (25% prior to 1 January 2007) against the corporate-income tax and seek a refund of the excess amount. Investors residing outside the Netherlands are subject to their respective national tax regime applying to foreign investment funds. Shareholders who do not pay tax in the Netherlands and who are resident in countries that have a tax treaty with the Netherlands to prevent double taxation, may seek a refund for part of the Dutch dividend tax from the Dutch tax authorities, depending on the treaty. As of 1 January 2007, a pension fund having its registered office in another EU member state is also entitled to a dividend-tax refund in the Netherlands. The above is based on the current fiscal legislation and regulation.

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 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.

After a euphoric mood at the start of the year, enthusiasm in global equity markets eased somewhat in February (flat in EUR, -2% in USD). Interestingly, better-than-expected macro data during the month underscored the battle on inflation might not be settled yet. Moreover, the much feared recession not yet truly materializing either also means that the end of peak rates is also likely delayed, meaning central banks will keep conditions tight for the time being. With macro still the dominating force of market direction and after the recent equities re-rating, it seems most investors err on the side of caution at this stage. Without any imminent recession, equity drawdown risk might decline too perhaps, hopefully directing investors' focus back towards bottom-up stock picking and credible self-help stories to find alpha. Since we still walk a fine line, navigating a multitude of market anxieties, it is best to sit still or at least remain very selective on where to join in.

Based on transaction prices, the fund's return was 0.37%. Despite flat absolute returns, in February our strategy outperformed the benchmark from a relative point of view. At the sector level, energy, technology and materials contributed the most to performance, while consumer discretionary and financials lagged during the month. On a stock level, STMicroelectronics again contributed the most, continuing its run after good results and increased guidance. Also, Meta Platforms continued its ascent, with investors rewarding the company changing its tack regarding its overspend on developing the Metaverse and instead focusing on returns. In a slight reversal back into European defensives, both publisher RELX and pharma company AstraZeneca benefited too over the course of February, contributing nicely to performance. On the flip side, disappointing results from Chinese e-commerce behemoth Alibaba, in particular on top-line growth, hurt performance during the month. However, with the Lunar New Year now behind us and post-Covid spending returning in China, we still think Alibaba will benefit greatly. Another detractor in February proved to be Alphabet, which continues to trade in a limbo as long as digital advertising spend remains lackluster.

As it stands, some of the recent equity rally may hold as long as growth stays resilient. But that's exactly where the crux lies: we have too many conflicting macro data points to confidently points us in either direction. What we do know is that equities in general, and the US market in particular, are trading at probably too rich multiples. With inflation proving stickier than many hoped and expected, most equities are starting to price in a rather quick reversal to more normalized levels, something we see as unlikely to happen in the near term. For a further market re-rating we still have a few tall hills to climb. As mentioned in our previous commentaries, we think China remains the wild card of hope with recent upticks in its PMIs, meaning the 'factory engine of the world' is slowly coming back to life. Whether this comes with a roar remains to be seen, but it can certainly have a positive trickle-over effect for other economies as well. Our cautious positioning in the higher quality areas of the market seems to be back in favor again. Hence it is an approach we clearly want to hang onto.