RobecoSAM Global SDG Engagement Equities YE CHF

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. Daniela da Costa is responsible for the team’s investments in Brazil and the African consumer sector. Prior to joining Robeco in 2010, she was Portfolio Manager Latin American Equities at Nomura in London. Before that, Daniela worked at HSBC and with the Petrobras pension fund in Brazil. She started her career in the industry in 1997. Daniela holds a Master's in Economics from the Brazilian Capital Markets Institute in Rio de Janeiro (IBMEC-RJ) and a MBA certificate in pension fund asset management from the Federal University of Rio de Janeiro (COPPE-UFRJ). She is board member of AMEC, the Brazilian stewardship agency and a member of Robeco’s SDG committee and Biodiversity Task Force. Peter van der Werf is Manager Engagement at Robeco. He leads the corporate and sovereign engagement program in the Active Ownership team and is involved in further integration of active ownership in Robeco’s investment products. With his engagement work he has challenged sustainability leadership at more than 200 global companies to align their environmental and social strategy with Robeco’s sustainable investing philosophy. As Portfolio Manager SDG Engagement Equities, Peter contributes to impact investing in listed equity. He is also an Advisory Board member of the Finance for Biodiversity foundation. Peter started his career in 2007 and holds a Master’s in Environmental Sciences from Wageningen University.

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 incorporates sustainability in the investment process by the means of a target universe, exclusions, ESG integration and engagement. The fund solely invests in stocks issued by companies with a low negative to low positive impact on the SDGs. The impact of issuers on the SDGs is determined by applying Robeco's internally developed three-step SDG Framework. The outcome is a quantified contribution expressed as an SDG score, considering both the contribution to the SDGs (positive, neutral or negative) and the extent of this contribution (high, medium or low). The fund actively engages with 100% of the corporate holdings typically for a period of three to five years. The fund does not invest in stock 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 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.

Never a dull moment in global equity markets, though this month's muted price action proved the opposite (flat in EUR, +2% in USD). Beneath the surface we have seen quite some stock dispersion on the back of 2023 first-quarter earnings results, with misses punished severely and only strong beats being rewarded. With over 50% of companies having reported thus far, it seemed most earnings reports did clear a low bar and backstopped markets for now after renewed macro and banking jitters from the previous month. Interestingly, many mega-cap tech and longer duration names continued their comeback, offsetting much of the damage from 'old economy' complexes that have been struggling year-to-date. Also, the strong performance of, for example, high-end luxury and conventional defensive stocks is concurrent, with an overall shift into quality pricing power plays and 'flight to safety'. Companies indeed sound cautious on demand and see cracks forming, with some seeing their all-time high backlog drying up rapidly, meaning less room for pricing from here onwards.

Based on transaction prices, the fund's return was -1.08%. The portfolio had a neutral performance in April, and still is up nicely for the year, relative to the benchmark. During April, we had positive contributions from stock selection in consumer discretionary and healthcare, while stock selection in information technology made a negative attribution. Healthcare was mainly helped by a positive contribution from Novartis, while Sony and AutoZone supported performance in consumer discretionary. We also had a positive contribution in financials from BTG Pactual, which recovered nicely after a difficult start to the year. The main underperformer in information technology this month was STMicroelectronics, which posted strong results. However, investors are clearly more concerned with regard to automotive semiconductors, and STMicroelectronics therefore gave up some of its year-to-date gains during April.

Interestingly, Europe seems to have become a relative safe haven with the US facing more specific risks ahead, such as a large come down from massive Covid liquidity, risky commercial real estate, the regional banks saga, debt ceiling debates and continued political divisions. The valuation differential between both regions with the US on 18x forward earnings versus 12x for Europe, might argue in favor of Europe since a long time. Still, large issues at play in the US, such as a hard landing or a severe contraction in credit markets, undoubtedly spill over to Europe too, outweighing any modest tailwind it gets from China's reopening and current 'easy comps'. While we do not own a crystal ball showing interest rate pathways and where they might peak out, or even start to ease down, we do think it makes sense to see an extended pause in any rate movement at some point. The status quo is fragile and the flurry of data points do imply calmer rate markets and equity markets staying somewhat in limbo. This means investors like us continue to be comfortable with sticking around in the quality corner for longer.