Robeco Emerging Stars Equities D USD

In August, emerging markets declined by 2.2% in euros, significantly lagging developed markets which were up 1.8%. There was significant currency depreciation in Turkey, Brazil, South Africa and Russia, which also had the weakest equity performance in euros, together with Greece and Chile. Best-performing countries were Egypt, the Philippines, Thailand and Korea, which were all up mildly. The Turkish lira was the emerging currency that fell the most. The crisis was triggered by new US import tariffs on Turkish steel and aluminum, but underlying causes are a large current account deficit, high credit growth and rising inflation. Also Argentina, which is to be included in the MSCI EM Index next year, experienced severe pressure on its currency. Negative market sentiment in combination with political risks also affected Brazil (uncertainty over upcoming elections), South Africa (discussions on land reform) and Russia (potential additional US sanctions). On the positive side, Mexico and the US agreed on a new trade deal, with actually relatively limited impact. During the month, the central banks of India, Indonesia, the Philippines and the Czech Republic raised interest rates to support their currencies.

The fund is allowed to pursue an active currency policy to generate extra returns and can engage in currency hedging transactions.

In principle, the fund does not intend to distribute dividend and so both the income earned by the fund and its overall performance are reflected in its share price.

For Robeco Emerging Stars 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 Stars Equities invests globally in emerging economies. The focus is on companies which combine a sound business model and solid growth prospects with a reasonable valuation. 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. On average, the fund invests in 35-50 companies and portfolio construction is independent of the index. Risk management is fully integrated in the investment process to ensure that positions meet predefined guidelines and the portfolio is diversified. The fund can protect investors from negative currency developments through active currency hedging. The fund aims to be fully invested. Robeco Emerging Stars aims to outperform the MSCI Emerging Markets 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 into the investment process to ensure that positions always meet predefined guidelines.