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.

"The positive race for climate technologies will have a sustainably beneficial effect on the companies in the fund."

Clemens Klein, fund manager ERSTE WWF STOCK ENVIRONMENT

"We remain positive and see the current price levels as an attractive entry point."

Alexander Weiss, fund manager ERSTE WWF STOCK ENVIRONMENT

Fund & Performance

The ERSTE WWF STOCK ENVIRONMENT invests worldwide primarily in companies in the field of environmental technology. The investment process of the fund is based on fundamental company analysis. The selection of stocks takes place with a focus on companies in which an environmental benefit could be identified and which primarily active in the areas of water treatment and -supply, recycling and waste management, renewable energy, energy-efficiency and mobility. A hedge against foreign currency risks is generally not provided, but is possible. Since October 2006, a cooperation exists between Erste Asset Management and WWF (World Wide Fund for Nature) and the fund management is supported by an environmental advisory board, initiated by WWF. At the same time, Erste Asset Management donates part of the management fee to the fund.

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

Commentary by fund managers
Clemens Klein und Alexander Weiss

  • Race for climate technologies positive for companies in the fund
  • Strong focus on energy
  • Current price levels offer attractive entry point 

 

How did the fund perform in the first half?

Global equity markets performed positively in the first half of 2023. This performance was mainly driven by a handful of large US technology companies – Apple, Microsoft, Alphabet, Meta, and Nvidia – which account for a large share of global indices and are among the largest companies in the world. The global economy continued to grow, and the expected recession has so far failed to materialise. In addition, inflation has recently declined, which is expected to bring central banks closer to the end of their interest rate hike regime.

The biggest positive contributions came from the energy sector. On the other hand, the focus on small- and mid-caps was eating into the performance.

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

The Russian invasion of Ukraine triggered a trend reversal at European and global level: Russia is no longer a reliable energy supplier; energy autonomy and the development of alternative energy sources have claimed top priority.

As a result, the EU adopted a plan last year (RePower EU) to diversify its energy portfolio. At the same time, the USA is sending positive impulses, having passed its own “climate act” – the Inflation Reduction Act – and thus putting Europe under pressure. This positive race for climate technologies will have a sustainably beneficial effect on the companies in the fund. Overall, more than 70% of the investments in the fund benefit from the Inflation Reduction Act or RePower EU. These are mainly companies in the energy segment. As a reminder, the fund is divided into three main themes: energy, water, and recycling. We continue to rate the solar sector positively, as it is the fastest and cheapest way to drive the energy transition. But the fund also includes topics such as electrical infrastructure, battery storage, hydrogen, and smart grid.

It remains our strategy to try to attend as many meetings as possible with the management of our invested companies. We paid several companies visits in the first half of the year again, for example in the USA and Denmark.

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

The aforementioned subsidy packages currently exist only on paper, and implementation is only just in the initial stages. Both topics will act as an accelerator for the topic of renewable energies and all associated topics, sometimes for more than ten years. In addition, the goal of energy autonomy will continue to have a strong effect, especially in Europe.

In a difficult macro environment, we therefore regard the fund as well-positioned to take advantage of these sustainable, positive trends.

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

For the reasons mentioned earlier we currently focus on energy, which accounts for almost 70% of the portfolio assets. Due to the sustained demand and the aforementioned subsidy programmes, company earnings in the renewable energy sector are rising at an above-average rate. As a result, valuations are now below market levels – a highly attractive combination, from our point of view. Accordingly, we remain positive and see the current price levels as an attractive entry point.

ERSTE WWF STOCK ENVIRONMENT

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.