Robeco Emerging Markets Smaller Companies Eq.D EUR

In the first month of the year, investor sentiment on global equities was riding high, before falling prey to the coronavirus-induced pneumonia outbreak in China. The MSCI EM Midcap Index declined 2.78%, lagging the developed markets, which were up 0.67% (all in EUR). Investors sought refuge in 'safe havens' such as gold and US Treasuries, leading to a sell-off in risky assets. Commodities also suffered from concerns over the potential return of global growth slowdown, with Brent oil prices tumbling 12%, copper down 10% and aluminum down 5%. Chinese markets were weak, as the optimism around the Phase 1 trade deal was overshadowed by the grim reality of the coronavirus crisis. The Chinese central bank has been easing liquidity conditions in the system to support the financial markets as well as the real economy. A good start for fund flows as EM equity funds saw net subscriptions of USD 10 billion in January.

The fund is allowed to pursue an active currency policy to generate extra returns. However, given the high transaction costs involved, the fund will be reluctant to use this possibility.

The fund does not distribute dividend. The income earned by the fund is reflected in its share price. The fund's entire result is thus reflected in its share price development.

Robeco Emerging Markets Smaller Companies Equities integrates ESG factors into its investment process by analyzing the impact of financially material ESG factors to a company’s competitive position and value drivers. We believe that this enhances our ability to understand existing and potential (long-term) risks and opportunities of a company. The impact of material ESG factors can be positive or negative, reflecting risks or opportunities, that ensue from a company’s ESG analysis. If ESG risks and opportunities are significant, the ESG analysis could impact a stock’s fair value and the portfolio allocation decision. In addition to ESG integration, Robeco also has an exclusion policy and conducts proxy voting and engagement activities focused on specific themes, such as climate change, aiming to improve a company’s sustainability profile.

Robeco Emerging Markets Smaller Companies invests globally in emerging economies. The focus is on companies which combine a sound business model and solid growth prospects with a reasonable valuation. These companies are less internationally active and their performance has a strong relation with the domestic economic development. The first step in portfolio composition is the top-down country selection, as research shows that country specific factors drive stock returns in emerging markets. The second step is in-depth fundamental analysis of companies and serves to identify stocks with the ability to outperform in the long run. Key items of our fundamental analysis are: growth prospects of sector, position of company within sector, competitive strength, financial health and strategy, corporate governance and management quality. We screen stocks with our proprietary quantitative model for attractive characteristics. Risk management is fully integrated in the investment process to ensure that positions meet predefined guidelines and the portfolio is well diversified. The fund can protect investors from negative currency developments through active currency hedging. The fund aims to be fully invested. Robeco Emerging Markets Smaller Companies aims to outperform the MSCI Emerging Markets Mid Cap Index over a full market cycle. This Sub-fund may invest in China A-shares via the QFII and/or a Stock Connect Programme which may entail additional clearing and settlement, regulatory, operational and counterparty risks.

Risk management is fully integrated in the investment process to ensure that positions always meet predefined guidelines.