The ERSTE STOCK GLOBAL invests globally in selected companies. The focus of the selection process is on companies with high quality and strong growth. There are no restrictions with regard to size, sector, or location. ESG factors are integrated into the selection 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 Andreas Rieger talks about his assessment of the YTD performance of the fund and his outlook for the coming months.

Interview with fund manager Andreas Rieger


What sort of performance did ERSTE STOCK GLOBAL achieve in the first half of 2022?

The high and continuously rising inflation rates have resulted in a dynamic increase in long-term interest rates, especially real ones. The increase in interest rates led to higher discount factors for asset valuation, which put pressure especially on the valuations of structural growth companies. This trend of falling valuation was particularly pronounced in the software industry, semiconductors, and logistics. Value shares, on the other hand, i.e. companies with lower valuations spearheaded by oil and gas companies, outperformed the broad market in this environment. Given the focus of ERSTE STOCK GLOBAL on long-term growth shares, this scenario had a negative impact on the fund, which lost about 21% in the first half of 2022.

 

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

The focus of the fund is – and will consistently remain – on growth shares. We continue to prefer companies that can increase their sales and earnings continuously over an economic cycle. In terms of sectors, we like the software industry, fintech, and life sciences. In the first half, we stepped up our allocation in consumer staples (beverages, household goods) due to the attractive defensive features of these companies in the current environment. As inflation protection, we hold selected shares in the energy and industrial sectors, bearing in mind quality and growth here as well. 

 

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

The bear market that we are currently in has hit growth shares particularly hard. After the significant corrections and the decline in valuations we can see interesting investment opportunities for long-term investors in growth companies with intact fundamental outlook. A falling trend of inflation/interest rates would lend support to the growth segment. Investors should be selective. Stock picking will be crucial in the coming months. Companies with sustainably above-average growth rates – especially in the ongoing global economic downturn – should soon be in high demand again by investors. The Q2 reporting season starting in July and the business outlooks should provide first insights.

Andreas Rieger

(c) Photo: Stephan Huger

„Growth shares with good outlook have become interesting again.”

Andreas Rieger, fund manager ERSTE STOCK GLOBAL

Important legal note:

Past performance is not a reliable indicator of an investment’s future performance.

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.

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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.

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