Robeco Emerging Stars Equities FL EUR

In August, the MSCI Emerging Markets Index dropped 3.8% in euro terms, lagging the 1% decline for developed markets. During the month, the China-US trade war aggravated with additional tariffs announced by both the US and China. Given the slower global growth outlook, global bond yields declined further, with German and Japan bond yields well in negative territory. The best emerging market was Egypt, while Mexico and Taiwan also performed relatively well. The worst market by far was Argentina, its equity market losing almost half its value in euro terms. This was triggered by a strong win for the opposition party in the preliminary elections. Following a sharp drop in the currency, the Macri government was forced to announce select capital controls and to seek debt restructuring. Next to Argentina, Turkey, Brazil and South Africa were also underperforming countries, although with much smaller numbers. Overall contagion from the Argentina crisis to other emerging markets has been moderate. Finally, with global interest rates declining, there is also room for lower rates in emerging markets, with rate cuts last month in India, Thailand, the Philippines, Peru, the UAE and Mexico.

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.

Robeco Emerging Stars 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 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.