Robeco Sustainable Global Stars Equities Fund - EUR E

Michiel Plakman is Lead Portfolio Manager and member of the Global Equity team. He is also Co-Head of Robeco’s Global Equity team. He is responsible for fundamental global equities with a focus on SDG investing and on companies in the information technology, real estate & communication services sectors, as well as portfolio construction. He has been in this role since 2009. Previously, he was responsible for managing the Robeco IT Equities fund within the TMT team. Prior to joining Robeco in 1999, he worked as a Portfolio Manager Japanese Equities at Achmea Global Investors (PVF Pensioenen). From 1995 to 1996 he was Portfolio Manager European Equities at KPN Pension Fund. He holds a Master's in Econometrics from Vrije Universiteit Amsterdam and he is a CFA® Charterholder. Chris Berkouwer is Portfolio Manager and member of the Global Equity team. He is also Deputy Lead Portfolio Manager. He is responsible for fundamental global equities with a focus on the low-carbon transition and on companies in the energy, materials and industrials sectors, as well as portfolio construction. He joined Robeco in 2010. Prior to that, he worked as an analyst for the The Hague Centre for Strategic Studies. He conducted country, industry and company research for various equity teams prior to joining the Global Equity team. He a holds Master's in Business Administration and International Public Management from the Erasmus University Rotterdam and is a CFA® Charterholder.

The fund is established in the Netherlands. The fund is managed as a 'naamloze vennootschap' (public limited company). The fund has the status of 'fiscal investment institution' in the sense of article 28 of the Dutch Corporate-Income Tax Act 1969, and, as such, is taxed at a corporate-income tax rate of 0%.The fund is obliged to pay out the realized current income in the form of dividend within 8 months after the end of the financial year. From 1 January 2007 the fund withholds Dutch dividend tax at a rate of 15% from these dividend payments. The fund can in principle use the Dutch treaty network to partially recover any withholding tax on its income.

For a private investor residing in the Netherlands, the actual received interest, dividends or capital gains are not relevant for tax purposes. For Dutch tax-resident private investors, their holdings fall under Box 3. Investors pay annual tax on a fixed yield calculated based on the value of their assets as of 1 January. The return depends on the pro-rata allocation of assets to different categories, namely savings, debts or other assets. The holdings qualify as other assets for which the return rate is set at 6.04% (as of 1/1/2024; 6.17% as of 1/1/2023). The return rate is adjusted annually based on historical returns from previous years. The balance of the different asset categories is referred to as the return base. The effective return rate is then calculated by dividing the return by the return base. This effective return rate is applied to the savings and investments base to calculate the benefit from savings and investments. The savings and investments base is equal to the return base minus the tax-free amount. Investors pay income tax (36% in 2024; 32% in 2023) on this calculated benefit from savings and investments. The withheld Dutch dividend tax (15% as of 1/1/2024) is creditable against the income tax payable for investors residing in the Netherlands. Investors who are not subject to (exempt from) Dutch corporate tax (including Dutch pension funds) are not taxed on the result obtained. Dutch exempt entities can fully reclaim the 15% dividend tax withheld on dividends.Investors subject to Dutch corporate tax may be taxed on the result obtained from their investment in the fund, including dividend income and capital gains. Dutch corporate taxpayers can, in principle, credit the withheld dividend tax (15% as of 1/1/2024) against corporate tax and, under certain conditions, credit the excess in later years. For investors outside the Netherlands, their own national tax legislation applies to foreign investment funds. Shareholders who are not subject to tax in the Netherlands and reside in countries that have a double taxation treaty with the Netherlands may, depending on the treaty, reclaim (a portion of) the Dutch dividend tax from the Dutch tax authorities. A pension fund located in another EU member state or a country that has entered into an information exchange agreement with the Netherlands and is similar to a Dutch pension fund is also entitled to a refund of Dutch dividend tax. The above is based on current Dutch tax legislation.

The fund incorporates sustainability in the investment process via exclusions, ESG integration, ESG and environmental footprint targets, and voting. The fund does not invest in issuers that are in breach of international norms or where activities have been deemed detrimental to society following Robeco's exclusion policy. Financially material ESG factors are integrated in the bottom-up fundamental investment analysis to assess existing and potential ESG risks and opportunities. In the stock selection the fund limits exposure to elevated sustainability risks. The fund also targets a better ESG score and at least 20% lower carbon, water and waste footprints compared to the reference index. 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.

Central bank action front and center, first in the US, then followed by a large stimulus plan in China, pushing markets another leg higher (+1.0% in EUR; +1.8% in USD). The large 50 basis points Fed rate cut was a reinforcement of the disinflation theme and marks the start of a new rate cutting cycle. And as investors assessed how many cuts are now already priced in, market leadership began to broaden out. Shortly after, a jumbo Chinese stimulus package accelerated this market regime change, dubbed a "Panda Rally", tilting more in favor of year-to-date laggards. This coordinated stimulus effort propelled sentiment toward beaten-down Chinese equities, but essentially toward all pockets leveraged to China such as the metals complex and luxury goods companies. Both central bank actions indicate that growth has to be safeguarded, almost at any cost, thereby moving the market more firmly into the 'soft landing' camp. We do believe this rally has more to room to run, though we remain reluctant to go all-in on this as hope is priced in much quicker than actual on-the-ground improvements.

Based on transaction prices, the fund's return was 0.60%. In September, the portfolio had a positive absolute return, though slightly lagging the world index. Sector-wise, our positioning in industrials and technology helped performance most, while the sectors financials, healthcare and consumer discretionary lagged. In terms of stock selection, iron ore miner Fortescue Metals contributed most to our excess performance as the Chinese stimulus package, partly aimed at reviving its ailing property sector, helped boost sentiment on the broader metals complex. In case these packages follow through to the real economy, there's more upside for iron ore prices to move higher, which will clearly benefit Fortescue. On the flip side, we saw AstraZeneca pulling back slightly after a good run. Trial results for its Dato-DXd treatment for breast cancer were positive, but perhaps less so than expected, causing a slight sentiment dip in the stock. However, the good efficacy and safety results compared to the existing treatment in the market will make it highly likely the FDA will approve Dato-DXd, nonetheless.

As the rate-cutting narrative gathers steam and the 'soft landing' scenario becomes consensus, stocks that have earlier been weighed down by weak balance sheets should see a lift. We already see that reflected in the outperformance of lower quality stocks, especially in cyclical areas and the small/mid-cap space. However, many uncertainties remain, whether it's US elections, tariff risks or escalating geopolitics in the Middle East. Pushing through measures that fix equity markets is not the same as fixing the fundamentals. Borrowing from the future to deliver in the present seems a risky proposition. And given that global equity markets are in touching distance of all-time highs again, every data point will be scrutinized. In the portfolio, we did add to attractively valued stocks with Chinese exposure that now have a clearer road of recovery ahead of them. At the same time, we keep a cool head in navigating macrocomplexities while putting most conviction in quality stocks that seem mostly agnostic to such outcomes.