The Robeco Sustainable Global Stars strategy uses a three-pillar investment strategy to define quality. In our fundamental approach, we look at three core attributes of companies as to how they create value over the long term: return on invested capital (ROIC), free cash flow (FCF) and sustainability. Instead of using a complex mash-up of many different variables, we focus on these three quality metrics. ¹ This approach has been supported by strong risk-adjusted returns over time and across different economic backdrops.

The focus on quality is also style-agnostic, so we can select stocks that we believe represent deep value – that trade well below long-term mean valuation levels for the sector – or high growth – those that trade at aggressive valuations based on their potential growth trajectory – and everything in between. Here we discuss five investments² we have made in recent years that span the whole investment style spectrum, giving insight into our stock selection and decision-making process.

The telecom sector has slipped from investor consciousness in recent years and major players like Deutsche Telekom have never regained the valuation premium they enjoyed in the heady days of the dotcom bubble of the early 2000s. In particular, tepid initial returns on investment in the 5G rollout, and the general view that telecom stocks had utility, rather than growth, characteristics led to a long period of price consolidation through the 2010s. However, Robeco’s fundamental analysis of Deutsche Telekom revealed strong cash generation from its US franchise T-Mobile US, and the prospect of both market share gains and cost efficiencies in the US and Germany, its two biggest markets. This thesis has been borne out so far and the company remains in our top 10 active weights³ in the strategy, meaning we are much more exposed to Deutsche Telekom than the MSCI World index we reference against.

Haleon is a UK-based multinational consumer healthcare company that was spun-out from the pharmaceutical giant GSK in 2022. We were interested in exposure to the fragmented global consumer healthcare sector and with well-known brands including Sensodyne toothpaste, Advil painkillers, and Centrum vitamins, Haleon was a company we decided to analyze for inclusion as a potential global star. The company was valued well below its peers despite consistent operational execution. This was because of litigation over the over-the-counter drug Zantac which was withdrawn from sale due to possible cancer risk in 2019, when Haleon was still part of GSK. We regarded the valuation discount the market had imposed on Haleon due to this risk as excessive, and thus invested. From a sustainability perspective Haleon is also making progress and we believe its efforts on sustainable sourcing and climate make it less sensitive to potential raw material and energy price increases. Haleon remains one of the top 10 active weights in the strategy.⁴

Relx evolved from business, legal and scientific publishing house Reed Elsevier, changing its name in 2015, and now concentrates on information and analytics as well as publishing and events. Relx was selected for the Global Stars strategy due to its strong cashflow generation, high ROIC and attractive sustainability profile. We regard Relx as a ‘quality compounder’ as while its growth profile has not been as exciting as companies in some other sectors, any top-line growth tends to be translated into increased profits. The company has recently also been adept at turning artificial intelligence into a business opportunity by applying generative AI to its legal database. From a sustainability perspective it’s also attractive, with its business operations supporting desirable outcomes including the dissemination of scientific knowledge and adherence to the rule of law. Relx remains in our top 10 active weights.⁵

Booking Holdings is one of the biggest companies in the online travel sector, a fast growing, and recently very resilient, consumer discretionary segment. As an online travel agent its platform is well-established and familiar and in the past five years it has extended its offering beyond hotels to other travel elements like flights, and the alternative accommodation space pioneered by its competitor Airbnb. Booking has generated consistent free cashflow and has continued to grow at the expense of traditional travel industry participants and in line with the overall expansion of the segment. In particular it has effectively pivoted from a pure agency model, where it facilitates a contract between the consumer and provider, to more of its revenue coming from a merchant model, where it sells hotel rooms, and other products it has pre-bought, at a mark-up. The company is held by the Sustainable Global Stars strategy as of 31 January 2025, but was not one of the top 10 active weights.

Nvidia spent periods of 2024 as the largest company in the world measured by market capitalization, which was at USD 3.4 trillion at the end of January 2025. Its remarkable growth story, as a prime beneficiary of the development of generative AI models, which have involved the use of Nvidia GPU-based datacenters, has been one of the landmark developments in modern capitalism. The Sustainable Global Stars strategy first invested in the company in November 2021 based on its growth profile, potential for margin expansion and growth in free cashflow. Our exposure to Nvidia has been additive to alpha for the strategy, vindicating the quality focus of our investment process as the company has built a deep moat around its accelerated computer silicon and software stack offering. The stock continues to be held by the Sustainable Global Stars strategy as of 31 January 2025, but it was not one of the top 10 active weights.

Footnotes

¹ For a more detailed look at our Quality investment process, please refer to ‘How quality delivers alpha’, Robeco, November 2024.
² Robeco. Data as of 31 January 2025. These are not buy, sell, or hold recommendations. Holdings are subject to change and shown for illustrative purposes only to demonstrate the strategy as of the stated date. Future inclusion of these securities in the strategy is not guaranteed, nor can their future performance be predicted.
³ Deutsche Telekom held a Sustainable Global Stars portfolio weight of 2.7% versus an index weight of 0.2% as of 31 January 2025
⁴ Haleon held a Sustainable Global Stars portfolio weight of 2.0% versus an index weight of 0.1% as of 31 January 2025
⁵ Relx held a Sustainable Global Stars portfolio weight of 2.1% versus an index weight of 0.1% as of 31 January 2025