Robeco Multi Asset Growth E EUR

Ernesto Sanichar is Portfolio Manager and member of the Sustainable Multi Asset team. He responsible for the Robeco Multi Asset funds, Robeco ONE and Defined contribution funds. His asset specialties are fixed income and FX. He has been part of Robeco's Investment Solutions department since 2005. Previously, he was Treasury Manager for four years. Prior to joining Robeco in 2001, Ernesto worked at ING Barings as a Product controller at the cash equities and derivatives desk for three years. Ernesto started his career in the investment industry in 1998. He holds a Master's in Financial Economics from Erasmus University Rotterdam. Mathieu van Roon is Portfolio Manager and member of the Sustainable Multi Asset team and is responsible for the Robeco Multi Asset funds, Robeco ONE and Defined contribution funds. He joined Robeco in 2011 within the Structured Investments department. Mathieu holds a Master’s in both Business Economics and Econometrics (cum Laude) from Erasmus University Rotterdam and is a Financial Risk Manager (FRM) 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 0.05% 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 incorporates sustainability in the investment process via exclusions, negative screening, ESG integration, targets on investments in companies and countries based on ESG performance as well as engagement and a minimum allocation to ESG-labeled bonds. For government and government-related bonds, the fund complies with Robeco’s exclusion policy for countries, excludes the 15% worst ranked countries following the World Governance Indicator 'Control of Corruption', and ensures investments have a minimum weighted average score of 6 following Robeco's proprietary Country Sustainability Ranking. The Country Sustainability Ranking scores countries on a scale from 1 (worst) to 10 (best) based on 40 environmental, social, and governance indicators. For corporate bonds, the fund does not invest in credit issuers that are in breach of international norms or where activities have been deemed detrimental to society following Robeco's exclusion policy. ESG factors are integrated in the bottom-up security analysis to assess the impact on the issuer's fundamental credit quality. In the credit selection the fund limits exposure to issuers with an elevated sustainability risk profile as well as excludes companies with high or medium negative SDG scores following Robeco's internally developed three-step SDG framework. Where issuers are flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to engagement.

Markets inched forward over April, as investors nervously await guidance from the Federal Reserve as to whether April is likely to be the last rate rise of this cycle. Within equities, US tech companies continue to deliver strong earnings and dragged markets higher. This leads to a very narrow number of stocks that outperform, which creates a challenging backdrop for stock pickers. First-quarter earnings continue to come in slightly ahead of expectations, but given the 12 to 18 months it typically takes for the Fed to soften the labor market – any compression on company margins may not be visible until later in the year. From a macro perspective, US economic growth slowed sharply in the first quarter of 2023, despite strong consumer spending. The Eurozone also posted meagre growth over the quarter. In contrast, China reported stronger-than-expected growth, with the surprise double-digit export and retail growth in March, spurring optimism that China's economic rebound has begun. Both global equities (EUR) and global government bonds (hedged to EUR) delivered a marginal positive return of 0.1%.

Based on transaction prices, the fund's return was -0.92%. The Robeco Multi Asset Growth Fund was down 0.8% over the month, slightly behind the benchmark. The rotation into more defensive sectors made for a strong headwind, given the overall quality growth style bias of the fund. This was typified by the underperformance of the growth-focused Equity Mega Trends segment. The Sustainable Global Stars Equities segment was the top performer in equities. Although the strategy holds a slight quality growth bias, the current positioning remains prudent and on the defensive side. The Credit Income segment had a stellar month, with the strong performance driven by duration exposure and credit. Credit returns were mostly driven by the holdings in the banking and insurance sectors. In the banking sector, a large part of the positive contribution came from holdings in the CoCo segment. The impact of the tactical asset allocation was flat. On one side, the overweight in emerging markets and underweight in US equities marginally detracted from performance. Conversely, the overweight in high yield versus credit was additive. It is worth noting that the high yield exposure benefited from a higher credit quality tilt.

We are becoming more cautious about the growth outlook. The continued deceleration of the manufacturing sectors is a worry, due to the more cyclical nature of this part of the economy. On top of this, credit conditions continue to tighten and inflation remains sticky. Our more cautious stance is somewhat contrarian, but we do not feel that other investors are adequately pricing in the downside risk. We therefore decided to reduce our exposure to equities. Within equities, we continue to tilt our exposure towards emerging markets and we hold on to our preference for high yield, but with less conviction. Our concern about growth is chipping away at our confidence in being long high yield, but on the other hand it is slowly improving the valuation case for government bonds. We remain of the view that the US will be the first to reach the peak in the hiking cycle and will lose support from interest rates, which will drive a weakening of the greenback. We therefore prefer exposure to the euro and the yen to exposure to the US.