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.

"Companies related to Artificial Intelligence (AI), including semiconductor and software companies, performed extremely well."

Harald Egger, fund manager ERSTE EQUITY RESEARCH

Fund & Performance

The ERSTE EQUITY RESEARCH is an equity fund that invests worldwide in the form of a concentrated portfolio. The fund selection is based on the publicly accessible recommendation list of Erste Group Research. Primarily, companies with a "BUY" rating on the recommendation list are considered for investment. When selecting stocks, the focus is on companies that show a relatively stable profit development, an above-average profitability and a positive momentum. A concentrated portfolio of 45-50 stocks is striven for as part of the portfolio construction process. Furthermore, the individual stocks are weighted independently of the market capitalization of the respective companies.

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 Harald Egger

  • Fear of weaker economy weighs on cyclical equities in particular
  • Environment should remain positive for quality and growth
  • Focus on technology and tourism remains unchanged

 

What are your conclusions from the first half of 2023?

In the first half of the year, ERSTE EQUITY RESEARCH performed positively, gaining about 9.8% (as of 4 July 2023). In general, however, the markets were mixed. Fears of a weaker economy and persistently high inflation weighed on cyclicals in particular. However, companies related to Artificial Intelligence (AI), including semiconductor and software companies, performed extremely well. Companies in the tourism industry also generated above-average rates of performance, benefiting from a strong trend after the Corona pandemic (hotel chains, cruise companies, airlines, etc.).

AI and the tourism industry were also the two themes on which the ERSTE EQUITY RESEARCH fund focused. Over the course of the reporting period, cyclicals were being continuously reallocated to these two focus themes. In addition, we had another focus on the two defensive sectors, non-cyclical consumer goods and healthcare.

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

We expect lacklustre growth for the second half of the year with the risk of recession and weakening inflation, which will, however, remain above the target level of the central banks. In this environment, quality and growth shares should continue to perform positively. We do not think the conditions are suitable for cyclical companies at the moment.

For the time being, we will not change our focus on technology and tourism. In addition, we remain strongly positioned in non-cyclical consumer goods. However, Erste Group Research and the fund management team react very quickly to new trends, which is why turnover can be high in some cases. In general, the fund focuses on quality and growth shares with cyclical companies mixed in. The fund invests equally weighted in about 50 companies that command a positive rating from Erste Group Research. Currencies remain unhedged; with a share of over 60%, the fund has a considerable exposure to the US dollar. Thus, foreign exchange fluctuations may have a significant impact on the overall performance.

Important legal note:

Prognoses are not a reliable indicator for future performance.

Disclaimer

This document is an advertisement. 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 § 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 Information Document 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 Information 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.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 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.