Persistently high inflation and the restrictive course of the central banks continued to dominate the first half of the year. In this series, Funds exclusive, our fund managers look back on the performance of selected funds and explain their view with regard to the second half of the year.

"We currently favour quality shares, growth shares, and the sustainability factor slightly." 

Markus Jandrisevits, fund manager ERSTE BEST OF WORLD

Fund & Performance

ERSTE BEST OF WORLD is a fund of funds that invests in global equity funds. The funds are selected on the basis of both qualitative and quantitative criteria. A broad diversification of investment styles and an overall balanced risk-return ratio are decisive for the weighting of the funds. The maximum weighting of a subfund is 20%. 

The performance is calculated in accordance with the OeKB method. The management fee as well as any performance-related remuneration is already included. The issue premium which might be applicable on purchase and as well as any individual transaction specific costs or ongoing costs that reduce earnings (e.g. account- and deposit fees) have not been taken into account in this presentation. Past performance is not a reliable indicator of the future performance of a fund.

Performance since start of the fund
Note: Past performance is not a reliable indicator for future performance.

Commentary by fund manager Markus Jandrisevits

  • Inflation will fall but remain at a higher level
  • Rapid interest rate cuts not expected
  • Quality stocks, growth stocks and sustainability factor currently slightly favoured

 

How did the fund perform in the first half?

At a Plus of about 8,0% (as of 4 July 2023), the fund underperformed its peer group slightly especially in Q1 2023 due to its more defensive positioning. That being said, the performance and the ranking have improved due to numerous re-allocations on an ongoing basis (please see below) since March.

What was the focus of the fund in the first half?

We started 2023 with a focus on funds investing in companies with high dividends (also high dividend growth), low volatility (minimum volatility), and companies with smaller market capitalisation (small caps). This allocation had been chosen at the end of December 2022 for the following three to six months, given the economic outlook at the time (inflation and recession expectations, ongoing conflict in Ukraine, etc.).

Due to the good earnings development, especially in US technology companies, 2023 began with an unexpected rally in large-cap growth equities. In addition, the problems with Silicon Valley Bank (SVB) and Credit Suisse hit the market in early March. These events led us to sell the small cap funds in their entirety. We also reduced the weightings of high-dividend companies and value shares in the fund. At the same time, we stepped up the quality segment and growth shares.

What do you expect for the second half in terms of global economy and trends?

We expect inflation to fall, but to remain at an elevated level (3-5%). We could also see a mild recession in the US in Q4 2023 or Q1 2024. Central banks will continue to monitor price developments and the labour market closely. There may well be a pause in interest rate hikes for the moment, but rapid interest rate cuts are not to be expected for now. AI is currently a driving factor of the equity market, and there is a strong focus on companies in this sector on the equity market. Valuations and profit expectations seem to have advanced quite a bit. Technically, some markets have now entered a bull market.

What are your priorities in the fund, based on the aforementioned expectations?

We currently favour quality shares, growth shares, and the sustainability factor slightly. At the same time, we are monitoring the development of mid/small caps relative to large caps very closely. We are also watching growth shares and, if necessary, we will increase the weighting of dividend shares and value shares. At present, we continue to focus on the quality and large cap growth segments and are therefore cautiously positive about the equity market.

ERSTE BEST OF WORLD

Important legal note:

Prognoses are not a reliable indicator for future performance.

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art  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 Art  21 AIFMG, and the Key Information Document can be viewed in their latest versions at the website 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 Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website 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.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. 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.

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.