Robeco Next Digital Billion F EUR

Michiel van Voorst is Co-Portfolio Manager within the Trends Equities team. He has a focus on financials/fintech/next digital billion. In 2019, Michiel rejoined Robeco from Union Bancaire Privée in Hong Kong where he was CIO Asian Equities. Prior to that, Michiel spent 12 years at Robeco in several senior positions including senior portfolio manager Rolinco Global Growth fund and Robeco Asian Stars. Prior to joining Robeco in 2005, Michiel was Portfolio Manager US Equity at PGGM and Economist with Rabobank Netherlands. Michiel started his career in the investment industry in 1996. Michiel van Voorst holds a Master’s in Economics from University of Utrecht 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 0.05% 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 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, EUR).

In October, the MSCI Emerging Markets Index reported a negative return of -3.9% in USD. The Next Digital Billion Fund underperformed this benchmark index. The fund's underperformance was primarily attributed to the broader adverse impact on emerging markets due to the ongoing rise in the US 10-year yield, which in turn affected FX rates and the inability to reduce rates to prevent local currency depreciation. We are currently in the midst of the earnings season, offering an opportunity to assess the influence of external macro-driven factors on sentiment in various regions worldwide. Although China is still facing challenges, we believe there are signs of stabilization, including a series of policy easings and better-than-expected results. From a macroeconomic perspective, countries across EM regions are still grappling with tight monetary policies imposed by the Fed's current hawkish stance.

Based on transaction prices, the fund's return was -6.69%. In October, internet platforms negatively impacted performance, with the largest detractor being Baidu, China's largest internet search engine, down 23%. The fintech segment of the portfolio contributed positively, primarily driven by the strong performance of Nubank, up 13%. The B2B/enterprise-focused segment had a negative impact in October, with both software technology developers, EPAM and Globant, declining by 15% and 14%, respectively. Mobility/e-logistics made a negative contribution to the fund's performance, primarily due to the 13% decline of Indonesian mobility and food delivery platform Grab. These fluctuations are typical for emerging markets and not event-specific. ICT & enabler companies negatively contributed to the fund's performance in October, with pan-African telecom company Airtel Africa down 10%, following a positive September. The online consumer & media segment continued to have a negative impact on the fund's results in October, with the most significant detractor being ATRenew, down 35%. This position in the fund is relatively small and has likely been influenced by negative market sentiment around China.

Despite facing persistent bearish sentiment and experiencing extreme volatility in our largest-exposure countries, Brazil and China, we remain confident in the ongoing improvement in the operational performance of our current portfolio holdings, and extremely happy to hold a significant overweight in some great outperformers. We are actively on the lookout for opportunities where the market might underestimate a company's future potential.