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.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 World Index TRN.

Global equity markets continued their correction phase that started in September also throughout the month of October. Economic growth, especially in the US, is still positive, but the first signs of a slowdown prompted the Fed to leave rates unchanged to allow some time for past hikes to take effect on the economy. This was particularly the case for the Life Science Tools and Analytics space, which is still affected by a slowdown of customer demand due to the normalization in biotech funding, inventory drawdowns, cautious ordering by big pharma clients and an anti-corruption campaign in the healthcare industry in China. Fears that continued weakness in Food & HPC volumes and lower price growth could lead to a contraction in revenue have weighed on the consumer staples and discretionary sectors. In the longer term, investors have also started to worry that weight-loss drugs will reduce the amount of calories consumed globally, hence shrinking demand for several packaged food categories.

Based on transaction prices, the fund's return was -3.04%. In October, the Sustainable Healthy Living strategy yielded a negative return but outperformed its investible universe and was slightly below the broad global market benchmark. In the portfolio, all clusters performed negatively, with Healthy Nutrition and Healthy Lifestyles performing better than the two healthcare clusters Therapeutics and Healthcare Efficiency. In general, performance of the consumer stocks was affected by concerns over consumer demand and elevated inventories. In addition, investors have started to worry about the implications that the recently approved, new, and very efficient obesity drugs will have on food companies and also on companies providing medtech devices and services for the treatment of cardiovascular diseases, diabetes and chronic renal disease. On an individual stock level, the biggest positive contribution came from Deckers Outdoor. As expected, its HOKA running shoe brand continues to grow quickly. However, the positive surprise in the recent quarterly results was that the UGG brand accelerated substantially as the company's efforts to diversify the UGG product range are bearing fruit.

The risks to economic growth have increased due to inflation, rate increases by central banks, geopolitical tensions and a slower recovery in China. We expect the global economy to weaken in the course of 2023. 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.