RobecoSAM Sustainable Healthy Living Equities I GBP

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 0.01% 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 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.

After the turmoil in the banking sector earlier in the year, the broad global equity markets continued to stabilize in April, despite a temporary correction in the second half. Company results reported so far show that post-pandemic normalization is in full swing, albeit with different impacts on sectors. On a positive note, hospitals have been able to resume surgeries at a more normal pace and the staffing situation is also improving. For elective surgeries, a slight catch-up effect is expected, resulting in a sizeable tailwind for medtech companies dependent on surgery volumes. Analytical companies with exposure to Covid testing have seen pressure on sales and often also margins. In staples, lower demand for products consumed at home and higher demand for products consumed out of home created shifts in sales categories. Higher inflation-driven prices are prompting consumers to buy more white-label products. Sportswear companies are still affected by supply chain issues, causing excessive inventories and higher promotions. The consumer staples and healthcare clusters performed slightly better than the global market, while consumer discretionary and materials lagged.

Based on transaction prices, the fund's return was 2.25%. The RobecoSAM Sustainable Healthy Living Equities strategy performed positively in April, substantially outperforming the broad global market and its investible universe. All four clusters ended the month in positive territory. Healthy Nutrition and Therapeutics performed the best, followed by Healthy Lifestyles and Healthcare Efficiency. On an individual stock level, the biggest positive contribution came from the producer of farmed salmon Bakkafrost. The Faeroe Island-based company benefited from the uncertainty relating to the tax situation that competing salmon farmers in Norway are facing and may for the first time break even in its operations in Scotland. DSM's contribution was the second largest. Its stock price rebounded after a longer period of underperformance ahead of the earnings results. The biggest negative contribution came from Columbia Sportswear, as its earnings were impacted by high third-party logistics costs and high inventories are weighing on the outlook. Consequently, Columbia also had to narrow its guidance towards the lower end of the previous range.

The risks to economic growth have increased due to inflation, rate increases by central banks, geopolitical tensions and the turmoil in the US regional banking sector. Global economic growth in 2023 is expected to be below average. 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.