Robeco Emerging Markets Smaller Companies Eq.I USD

In November, emerging market equities experienced a significant bounce. The MSCI EM Midcap index rose 5.7% in euros, performing much better than the 1.2% uptick for developed markets. Key reasons for the rebounding global markets were less hawkish signals from the US Federal Reserve on the monetary tightening, a balanced outcome in the US midterm elections and lower energy prices. Some of the EM currencies rose, led by the rate sensitive Turkish lira and the South African rand. Oil prices collapsed with Brent crude 20% lower as concerns of oversupply resurfaced. India recouped its losses from October, thanks to the drop in oil prices. Indonesia, where interest rates were increased by 0.25% point, was driven by the surge in the banking sector. Latin America performed weak in November, dragged down by Brazil and Mexico. A weak Brazilian real weighed on the performance of the equity market, while Mexico continued to suffer from concerns about policy uncertainty from the incoming administration of López Obrador, which also prompted the central bank to hike rates by 0.25% point.

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.