Robeco Sustainable Emerging Stars Equities D EUR

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. Karnail Sangha is a Portfolio Manager within the Emerging Markets Equity team and provides analytical research coverage on India. He is Co-Portfolio Manager for the Emerging Stars and Sustainable Emerging Stars Equity strategies. Prior to joining Robeco in 2000, Karnail was a Risk Manager/Controller at Aegon Asset Management where he started his career in the industry in 1999. He holds a Master's in Economics from Erasmus University Rotterdam and is a CFA® charterholder. Karnail is also fluent in Hindi and Punjabi.

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, 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 footprint 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.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, EUR).

In August, the MSCI EM Index declined by 0.7% in euro terms, lagging the 0.3% return for developed markets. For the full year as well, emerging markets are still lagging developed markets, with returns of 9.3% versus 16.5%. In August, the month began with a sharp equity sell-off driven by two macroevents: a weaker-than-expected US labor market report which raised recession fears, and a surprise interest rate hike by the Bank of Japan which led to a sharp appreciation of the yen and a carry trade unwind. Despite these initial shocks, emerging markets recovered as US recession fears eased with better growth and inflation data. A declining US dollar provided a tailwind for EM as well. ASEAN (South-East Asia) was by far the strongest region, with the equity indices of Indonesia, Malaysia, the Philippines, Thailand and Vietnam all significantly up. Brazil also performed relatively well, while Turkey, Mexico, South Korea and Greece were the main laggards in August.

Based on transaction prices, the fund's return was -1.22%. In August, the fund lagged the MSCI Emerging Markets Index due to a negative stock selection result, while country allocation made a neutral contribution. For country allocation, the overweight in South Korea contributed negatively, which was balanced by positive contributions from the overweight in Brazil and Vietnam, and the zero weight in Turkey. Stock selection contributed negatively mainly due to the positioning in China, with negative returns for video platform company iQIYI, e-commerce company Vipshop and electric appliances company Haier Smart Home. Other negative contributors were Samsung Electronics and Mexican financial Banorte. Positive contributions in August came from the holdings in Thai Kasikornbank, Indonesian Bank Rakyat and South Korean battery company Samsung SDI, and from not having a position in Chinese e-commerce company PDD.

Global interest rates have increased over the past years, but growth in the major economies has remained fairly stable. And as inflation has come down, we may see a gradual reduction in key interest rates. The emerging markets seem relatively well positioned, with lower inflation in many countries and more room for interest rate cuts due to a more aggressive hiking cycle in the past years. Brazil and some other Latin American countries have already started to cut rates. Growth in emerging markets is holding up relatively well. Emerging equity markets' valuations have become attractive relative to developed markets with discounts of more than 30% based on earnings multiples. Earnings growth in 2023 was disappointing, but is recovering this year with more than 20% earnings growth expected.