Robeco Sustainable Water I USD

Dieter Küffer is Portfolio Manager of the Robeco Sustainable Water strategy and member of the Thematic Investing team. He has managed the strategy since inception in 2001, the year he joined Robeco. In the past, he has also managed several other thematic strategies at Robeco. Prior to joining, he led a team responsible for the management of actively managed equity mandates on behalf of Swiss institutional clients at UBS Asset Management in Zurich. He began his career as an investment counsel in the Private Banking Division of UBS in 1986. Dieter Küffer holds a federal diploma as a Swiss-Certified Banking Expert and is a CFA® charterholder. Amy Wanner-Thavornsuk is Co-Portfolio Manager of the Robeco Sustainable Water strategy and member of the Thematic Investing team. Prior to joining in 2019, she worked for 9 years at JPMorgan Assets Management in London, whereof 6.5 years in the same role covering emerging market equities. She has been in the Financial Industry for almost 20 years with previous work experience in investment banking and consulting. She started her career as an auditor at PWC in Bangkok back in 2003. Amy holds a Bachelor of Science in Finance & Accounting from the Chulalongkorn University in Thailand and an MBA from the Bayes Business School, UK. She is a CFA® Charterholder.

The fund is established in Luxembourg and is subject to the Luxembourg tax laws and regulations. The fund is not liable to pay any corporation, income, dividend or capital gains tax in Luxembourg. The fund is subject to an annual subscription tax ('tax d'abonnement') in Luxembourg, which amounts to 0.01% of the net asset value of the fund. This tax is included in the net asset value of the fund. The fund can in principle use the Luxembourg treaty network to partially recover any withholding tax on its income.

Investors who are not subject to (exempt from) Dutch corporate-income tax (e.g. pension funds) are not taxed on the achieved result. Investors who are subject to Dutch corporate-income tax can be taxed for the result achieved on their investment in the fund. Dutch bodies that are subject to corporate-income tax are obligated to declare interest and dividend income, as well as capital gains in their tax return. Investors residing outside the Netherlands are subject to their respective national tax regime applying to foreign investment funds. We advise individual investors to consult their financial or tax adviser about the tax consequences of an investment in this fund in their specific circumstances before deciding to invest in the fund.

The fund's sustainable investment objective is to help mitigate the global challenges related to scarcity, quality, and allocation of water. Water and sustainability considerations are incorporated in the investment process by the means of a target universe definition, exclusions, ESG integration, and voting. The fund only invests in companies that have a significant thematic fit as per Robeco's thematic universe methodology. Through screening on both Robeco's internally developed SDG Framework and Robeco’s exclusion policy, the fund does not invest in issuers that have a negative impact on the SDGs, are in breach of international norms or where products have been deemed controversial. Financially material ESG factors are integrated in the bottom-up fundamental investment analysis to assess existing and potential ESG risks and opportunities. The integration of ESG factors in the investment analysis does not have a sustainability indicator. In addition, where a stock issuer is flagged for breaching international standards in the ongoing monitoring, the issuer will become subject to exclusion. Lastly, the fund makes use of shareholder rights and applies proxy voting in accordance with Robeco's proxy voting policy.The following sections display the ESG-metrics for this fund along with short descriptions. For more information please visit the sustainability-related disclosures.The index used for all sustainability visuals is based on MSCI World Index TRN.

Over the third quarter, stock performance has been rather sideways. In October, the MSCI was up 0.6% in EUR terms. Sentiment in equity markets was significantly influenced by macro news, especially in relation to interest rate cuts. Recently, some US macro data were rather stronger than expected. Hence, there seems to be a fear that the US central bank, the Fed, will postpone the next interest rates cuts. There was also some uncertainty around the US elections which took place on November 5th. However, if the result would have been tight there might have been some postponement of the sign-off of the voting results and some re-counting of votes. On the other hand, it appears that the market has started to expect a faster pace of rate cuts from the ECB, given that the European economy is not doing very well. Looking at the MSCI World Index by sectors, communication services, energy, financials and information technology outperformed in October. The first three sectors are not part of the water investment universe, while the 4th plays a minor role. Hence, it was a rather challenging month for the Water Fund versus the MSCI World Index.

Based on transaction prices, the fund's return was -6.48%. The Quality and Analytics cluster performance was down 7.2% in October, after a strong +8.0% performance in Q3. The Water Analytics subcluster suffered under profit-taking, although in general, they reported a good momentum in consumables and services. Avantor (-11.1%) mentioned weaker numbers in advance materials which supply the semiconductor industry. In the Resource Protection subcluster, Cintas performed well (+2%), driven by strong execution. The Utilities cluster was slightly down, given news flows around UK water utilities and the regulatory framework. Expect some volatility around this time until the final determination is announced in December. The Building Materials subcluster was down (-3.9%) after a strong performance in Q3. European companies like Aalberts and Sika underperformed as the European macroeconomic development is still weak. The Engineering & Construction subcluster was up +5%, led by AECOM (+6.5%) and Tetra Tech (+6.5%). APi Group was up +6.3%, rebounding from the recent weakness. The Capital Goods and Chemicals cluster was down (-4.1%). Share price performance is mixed, as the cluster consists of a broad range of industrials which mostly reported mixed results for the quarter.

The fund remains focused on fundamental analyses of companies' quality and valuation. We are disciplined with our fundamental research and valuation methodology. Overall, the fund is still overweight in water analytical equipment, building materials and water treatment systems. Many of our top holdings are companies that have significant exposure to address aging water infrastructure, water quality, water scarcity and efficiency. In Building Materials, we prefer to focus on companies related to infrastructure and residential housing, where there are signs of a demand trough. The fund is overweight in Veolia Environnement and some US utilities, and does not currently hold any Brazilian water utilities.