Robeco Emerging Markets Smaller Companies Eq.I USD

In February, the MSCI Emerging Markets Midcap Index gained 0.2% in euros. This was below the 3.80% increase of developed markets. Main reasons for the positive returns were the increased expectations of a trade deal between the US and China, signals that the Chinese government will take more measures to support the economy and dovish Fed comments about the tightening of the Fed's balance sheet. The underlying economic data has continued to weaken and earnings expectations have been revised downward. Equity markets have been looking through this weakness with the expectation that the economy will pick up in the coming quarters on the back of the fundamental improvements mentioned. Energy saw another strong month with Brent up 8.0%, as OPEC continued to talk up output cuts, with the Saudis and Russia both apparently willing to produce less than required by their agreement. Iron ore prices continued to surge higher on the Vale tailing dam disaster. Looking at currencies, after giving a strong performance in January, the South African rand declined 5.9% in February as investors were worried by the operational and financial struggles of the state-owned utility Eskom.

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.

For Robeco Emerging Markets Smaller Companies Equities, ESG factors are incorporated in the investment and decision-making process. A proprietary bi-annual corporate governance questionnaire is an integral part of the fundamental framework. The team assesses shareholder, board, management, government, social and environmental factors where appropriate. The team also includes ESG considerations in their country allocation process. ESG-based considerations impact the stock valuation analysis. Relevant ESG issues are discussed with company management on a case by case basis. Input from RobecoSAM Sustainability analysts is used to further enhance ESG integration in the investment process.

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.