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.

"As in previous years, well-managed companies with strong long-term growth potential form the core of the fund."

Andreas Rieger, fund manager ERSTE STOCK GLOBAL

Fund & Performance

The ERSTE STOCK GLOBAL invests in selected companies worldwide. The fund's investment process is based on fundamental business analysis. The selection of stocks takes place with a focus on high-quality growth companies without restrictions on size, industry affiliation and location. A concentrated portfolio 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 Andreas Rieger

  • Our focus remains on growth shares of high quality
  • The technology sector commands the largest allocation in the fund
  • Positive growth prospects for emerging economies and Asia

 

What conclusions did you draw from the first half of 2023?

The cyclical bear market of 2022, in which the global equity market shed almost 15% in value (in EUR), was followed by a rebound beginning in the fourth quarter of 2022 that has continued until the present day (as of 4 July 2023). The stock market climbed through the “wall of worry”, which was characterised by a variety of adverse factors: rapid interest rate hikes by central banks worldwide, persistently high, albeit falling, inflation rates, the fear of recession, and the crisis in the US regional banking sector.

The leading regional equity indices showed a solid performance in the first half of this year in the range of about +5% to +15% (in EUR), including ERSTE STOCK GLOBAL with gains in the high single-digit percentage range (as of 4 July 2023).

What sectors and factors were in focus in the first half?

In the fund, we continued to invest in high-quality growth equities. As far as sectors were concerned, we favoured defensive ones such as consumer staples (beverage manufacturers, cosmetics companies) and healthcare (medical technology, life sciences), whereas we were less exposed to oil and gas companies or commodities.

Equities from the technology sector remained the largest component of the fund, and we kept a particularly strong weighting in the semi-conductor sub-sector. From a regional perspective, we started to build more exposure to emerging markets and Asia (including China) in the first half of the year, as our assessment of the medium-term growth prospects in the context of attractive valuations is more positive than the one the market has so far priced in.

What do you expect for the rest of the year?

Contrary to market expectations of a coming recession, the global economy proved comparatively resilient in the first half of 2023. We expect a further weakening of economic indicators and a falling inflation rate in the USA in the second half of the year (i.e. a so-called soft landing). Such a scenario tends to favour more defensive equities, large-caps, as well as quality and growth shares. The growth vs. value debate is also overshadowed by the strong interest in and demand for Artificial Intelligence technologies.

What is your focus for the second half of the year?

Our strategy in the fund can be roughly described by three focal points, which overlap in parts. As in previous years, well-managed companies with strong long-term growth potential form the core of the fund. In addition, we can see investment opportunities in themes such as regionalisation, automation, and investment, which we believe will play a significant role in the new equity market cycle.

The important technological trend of Artificial Intelligence (AI), in which we have already selectively invested as a growth fund, is the third strategic element that we monitor. Both providers of various AI technologies (such as chip developers, cloud platforms) and companies that successfully integrate these innovations into their business models (such as industrial companies) suggest interesting medium-term investment ideas in this context. In general, we believe that individual share selection should be more important than selection based purely on sectors, regions, or investment style.

ERSTE STOCK GLOBAL

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.