Robeco Circular Economy IH GBP

Natalie Falkman is Portfolio Manager of the Robeco Circular Economy strategy and member of the Thematic Investing team. Before joining Robeco in 2022, she was a portfolio manager for Kapitalinvest, a global equity, 5-star rated by Morningstar and AAA-rated by Citywire (Global blend-category) fund at Swedbank Robur in Stockholm. Prior to that, she worked at Carnegie (largest independent investment bank in the Nordics), first as the Head of Emerging Markets Research and thereafter with Nordic Capital Goods Equity Research. She started her career in 2002 as an equity research analyst at Deutsche Bank in Moscow covering utility and shipping sectors. Natalie holds a Master’s in Finance from Stockholm School of Economics.

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 finance solutions that support the transition from traditional production and consumption patterns toward a circular economy. Circular economy 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. 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 (Hedged to GBP).

The MSCI World and markets in the US reached new highs. In Europe however, investors' sentiment was soured by political uncertainties and the weak industrial demand. The eye-catching discrepancy between Europe and the US might partly be due to the structural challenges in Europe, but in the shorter-term, this divergence might present a tactical opportunity. Post-US elections there are now a few 'knowns' and still many 'unknowns'. Focus on domestic growth in the US is something we could expect from the new administration. This is positive for many smaller US holdings in the fund. Localization of manufacturing would be beneficial to many fund companies. The new administration is also expected to have focus on US health issues. Making it easier for people to make healthier choices is part of business models of several fund companies. There has been some discussion on environmental regulations in the US. We would like to highlight that the PFAS regulations were introduced during President Trump's first term. We do not expect any roll-backs of environmental regulations.

Based on transaction prices, the fund's return was 6.00%. In November, the fund outperformed the broader MSCI World. The largest positive performance contribution was delivered by the industrial sector. US industrials that are expected to benefit from a strong local demand performed well. The strongest performance headwind came from the fund not owning any financials. When it comes to individual performance contribution, the top 15 holdings that provided the largest positive contribution versus the broader MSCI World were all US companies. The situation was the opposite looking at the main performance detractors. Among those, non-US companies dominated. The strategy strongly outperformed its internal benchmark. Consumer discretionary, materials and consumer staples were the three key sector contributing to positive outperformance. When it comes to absolute share price performance, Snowflake's stock price was up >50%. The company reported financial numbers and could show strong double-digit growth. We view Snowflake as an important facilitator in the era of AI-driven business intelligence.

We are now past the clearing event in the US. There are still many unknowns, but we do know that domestic growth will be the key focus of many future policies. This bodes well for mid- and small-cap stocks in the US, as those usually are reliant on domestic demand. A weaker economic cycle has been discussed by many companies. Moving into 2025, the inventories are cleaner, visibility that is required to make investment decisions is improving and the base effect is also no longer a headwind. Few investors expect a V-shaped recovery, but the cyclical part of the economy should at least not be any worse and hopefully stronger. The main risk to the positive expectations is the inflation suspending its slide down to 2%. The impact of the potential new tariffs on inflationary impulses is one of the main areas investors are watching. The new administration could differ from the past four years in their approach to geopolitics. If resolved, conflicts in Europe and in the Middle East could improve investors' optimism and reduce markets' risk premium.