The ERSTE RESPONSIBLE STOCK DIVIDEND is a sustainable equity fund that invests mainly in the shares of selected companies in the developed markets. The investment process of the fund is based on fundamental company research. We prefer companies with medium to high market capitalisation, attractive dividend yield, and comparatively low historical volatility and prioritise companies that are ESG pioneers in our investment decision-making process.

Turbulent first half year on the markets

The sentiment on the equity and bond markets was clearly down in the first half of 2022. Numerous factors are driving the current affairs at the moment. For example, inflation has increased significantly since the end of last year, which led the central banks like the Federal Reserve in the USA and the European Central Bank (ECB) to take action. In reaction to the drastic increase in inflation, the central banks tightened their monetary policy and heralded the end of low interest rates. The Ukraine war and increasing geopolitical tensions are also burdening share and bond prices.

The situation created by these three factors has increasingly led to concerns about economic growth, which is also reflected in the economic data. The development of the market environment in the second half of 2022 should therefore depend crucially on the path of inflation. Due to strong base effects, experts suggest that inflation might peak in autumn. The development of the Ukraine war from here on out will also remain an uncertainty factor for the rest of the year. Given this context, the risk of a recession is particularly high in Europe at this point in time.

For more information on a regular basis, please visit the investment blog of Erste Asset Management. Here, you can find not only articles and comments on the status quo of the market, but also interviews with experts of Erste Asset Management and interesting facts about funds and investments.

In the exclusive interview below about the first half of 2022, fund manager Alexander Sikora-Sickl talks about his assessment of the YTD performance of the fund and his outlook for the coming months.

Interview with fund manager Alexander Sikora-Sickl


What sort of performance did the fund achieve in the first half of 2022?

The ERSTE RESPONSIBLE STOCK DIVIDEND was down 1.99% in the first half of 2022, which meant it still outperformed the general market and most equity indices by a wide margin. For example, during the same period, the MSCI World index lost 13.41% (in EUR), the S&P-500 index fell by 13.70%, and the broad Euro Stoxx index shed 17.98%. (Please note that ERSTE RESPONSIBLE STOCK DIVIDEND does not follow any benchmark; these values are only meant to illustrate the relative performances).

The driving force behind the performance of the fund was the relative strength of the factors high dividend and minimum volatility. These are the factors on which the qualitative stock selection of ERSTE RESPONSIBLE STOCK DIVIDEND relies. In view of the uncertain political environment and the growing economic worries, investors focused on these very same factors in the first six months of the year, whereas they largely shunned growth shares.  

 

How is ERSTE RESPONSIBLE STOCK DIVIDEND currently positioned? What is your focus in this fund?

At the moment, non-cyclical consumer goods and healthcare command disproportionately heavy weightings in ERSTE RESPONSIBLE STOCK DIVIDEND. Telecoms and utility shares are also prominently weighted, whereas we have reduced the weighting of cyclical shares from the industrial sector and consumer goods in the most recent regrouping. The technology sector experienced the most significant reduction. IT companies have always been underrepresented in the fund due to their low dividend payout ratio. Due to the recent increase in volatility within the sector, we now only hold three technology companies in the portfolio anymore.

Regionally speaking, the USA accounts for 65% of assets under management, followed by Europe (24%) and Japan (6.4%). The current dividend yield of the portfolio amounts to 4.95% (global equities: 2.32%), and the 2022 forward P/E is 10.35x (global equities: 16.0x).

Alexander Sikora-Sickl

(c) Photo: Stephan Huger

„Given the uncertainties we expect defensive market segments to outperform the broad market again. This should be beneficial for the ERSTE RESPONSIBLE STOCK DIVIDEND."

Alexander Sikora-Sickl, fund manager ERSTE RESPONSIBLE STOCK DIVIDEND

What is the outlook for the fund in the coming months?

The second half of 2022 should remain challenging. The highest inflation rates in decades, rising interest rates, high energy costs, persistent supply chain problems, and an impending halt of gas supplies from Russia are likely to cause further price fluctuation on the stock exchanges in the coming months. Given the uncertainties we expect defensive market segments to outperform the broad market again. This should be beneficial for ERSTE RESPONSIBLE STOCK DIVIDEND.

Performance chart since fund inception

Important legal note:

Due to the very short term, this presentation of the performance is not very meaningful.

Disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the  web site www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.