Robeco Emerging Markets Equities I USD

Wim-Hein Pals is Head of the Robeco Emerging Markets Equity team and Lead Portfolio Manager of the Global Emerging Markets Core strategy. Previously, he was Portfolio Manager Emerging European and African equities and Portfolio Manager Emerging Asian equities. Wim-Hein started his career in the investment industry at Robeco in 1990. He holds a Master's in Industrial Engineering and Management Sciences from Eindhoven University of Technology and a Master's in Business Economics from Tilburg University. Dimitri Chatzoudis is Portfolio Manager Institutional Emerging Markets Accounts. As a Research Analyst he covers the team’s investments in Mexico. Before joining Robeco in 2008, he was Portfolio Manager Eastern European and Global Emerging Markets at ABN AMRO. He started his career in the industry in 1993. Dimitri holds a Master’s in Industrial Engineering from Eindhoven University of Technology and is a Certified European Financial Analyst. Dimitri is also fluent in Greek. Jaap van der Hart is the Lead Portfolio Manager of Robeco’s High Conviction Emerging Stars strategy. Over time, he has been responsible for the investments in South America, Eastern Europe, South Africa, Mexico, China and Taiwan. He also coordinates the country allocation process. He started his career in the investment industry in 1994 at Robeco's Quantitative Research department and moved to the Emerging Markets Equity team in 2000. Jaap holds a Master's in Econometrics from Erasmus University Rotterdam. He has published several academic articles on stock selection in emerging markets. Cornelis Vlooswijk is Lead Portfolio Manager and Research Analyst African Equities. Previously, he worked for Robeco as an investment strategist focusing on North America and Emerging Markets since 2005. Before joining Robeco in 2005, he worked for Credit Suisse First Boston as an Investment Banking Analyst, focusing on the transport and logistics sector. He started his career in the financial industry in 1998. Cornelis holds a Master’s in Economics from Erasmus University Rotterdam and 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 incorporates sustainability in the investment process through exclusions, ESG integration, engagement 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 investment analysis to assess existing and potential ESG risks and opportunities. In the stock selection the fund limits exposure to elevated sustainability risks. In addition, where a stock issuer is flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement. 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 Emerging Markets Index (Net Return, USD).

In October, emerging markets declined 3.73% (EUR), underperforming developed markets, which declined 2.74% (EUR). Sentiment in October was negative, caused by the US 10-year bond yields rising to 5%. The continued challenges in China's property sector did not help either. The largest contributor to EM's negative performance remained China, followed by South Korea and Taiwan. Only healthcare was modestly positive, while all other sectors showed declines. Crude oil prices went down by 8%, while natural gas prices shot up 22% on increased supply concerns due to the tensions in the Middle East. The industrial metals price index was down 4%, whereas the precious metals price index rose 6%. Most of the EM currencies weakened against the US dollar, with the Mexican peso and the Turkish lira as the biggest losers. The Polish zloty was the biggest gainer, with an appreciation of 4%, on the back of a more pro-EU election outcome. The Polish equity market was by far the best-performing one. Other countries that performed well were Greece, the Czech Republic and Hungary. EM equity funds continued to see outflows to the tune of USD 9 billion, with the cumulative inflows for 2023 at USD 14 billion.

Based on transaction prices, the fund's return was -3.87%. The fund underperformed its benchmark (MSCI EM) in October, with both country allocation and stock selection detracting from the overall performance. The negative country allocation contribution came from our overweight positions in South Korea and Vietnam. The overweight positions in Brazil, Greece and Hungary contributed positively to country allocation. In terms of stock selection, selected banks in the fund performed strongly, with Alpha Bank (Greece), OTP Bank (Hungary), Kasikornbank (Thailand) and Grupo Banorte (Mexico) up strongly in October. HCL Technologies (Indian software services) and KGHM, a copper producer based in Poland, also outperformed in October. Stocks that lagged were to be found in China, where Baidu (internet search engine), Alibaba (e-commerce), Vipshop (online retailer), PICC P&C (general insurance), Haier Electronics (home appliances), Ping An (life insurance) and Xinyi Solar (solar panels) underperformed. Other stocks that lagged in October were Emaar Properties (UAE), Sendas Distribuidora (Brazilian hypermarkets), Hana Financial (South Korea), Petronet (Indian gas player), LG Chemical (South Korea) and Macronix (Taiwanese memory).

The global environment is still challenging for equity markets, as inflation remains high and global central banks have continued to raise interest rates. This has led to financial stress for some European and US banks, and global growth is likely to slow down. However, emerging markets seem well positioned, as inflation is much lower in many countries, they were earlier in hiking interest rates in this cycle and growth in China has picked up after the end of the zero-Covid policy. After the recent market correction, equity valuations have become attractive, and EM is now trading at valuation levels that are lower than its long-term averages. In addition, emerging markets are attractively valued relative to developed markets with discounts of over 30% based on earnings multiples.