Robeco Emerging Stars Equities FL EUR

In January, the MSCI Emerging Markets Index declined by 3.4% in euro terms, lagging developed markets, which were up 0.7%. The most important development in January was the outbreak of the coronavirus in China, with rising levels of infection. Travel from Wuhan and the Hubei province was severely restricted, the Chinese new year holiday period was extended for many sectors and foreign travel to and from China came down sharply. Growth in China is likely to come down significantly as long as the virus is not under control. The weaker growth outlook has led to a significant price drop for oil and other commodities. The Chinese equity market actually performed in line with the overall emerging markets index. Best markets in January were Egypt, Turkey and Mexico, whilst Hungary, South Africa and Thailand performed the worst. South Africa still suffers from regular power cuts and a stretched fiscal position. Other important developments in January were the signing of the Phase 1 trade deal between the US and China, and a clear election victory for the incumbent DPP party in Taiwan.

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.