After a difficult year of 2022 on the markets, many asset classes saw rebounding performances in 2023. While the central banks' turnaround on interest rates ensured a “return to normality” on the bond market, the focus on the equity market was primarily on technology companies. In the Funds exclusive series, the fund managers of selected funds look back on developments of the previous year and give their assessment of what the markets could expect in 2024. (Note: Prognoses are not a reliable indicator of future performance.)

"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%. 

Note: Past performance is not a reliable indicator of future performance.

Performance since start of 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.

Commentary by fund manager Markus Jandrisevits

How did the fund perform in 2023?

At +12.5% the fund slightly underperformed other equity funds due to a more defensive positioning, particularly in Q1 2023. Performance has improved steadily since mid-March due to various changes (see point 2). In the second half of the year, the addition of quality and sustainability proved to be an advantage.

 

What was the focus of the fund in 2023?

We set off into 2023 with a focus on funds that invested in companies with high dividends (including high dividend growth) (high dividends), companies with low performance fluctuations (minimum volatility) and companies with small capitalisation levels (small caps). We chose this focus against the backdrop of the economic outlook at the time (inflation and recession expectations, ongoing conflict in Ukraine, etc.).

Due to the good earnings development of US technology companies in particular, 2023 began with an unexpected rally in large-capitalised growth shares. In addition, the problems with Silicon Valley Bank (SVB) and Credit Suisse hit the market at the beginning of March. This development prompted us to sell our small cap funds in their entirety. We also reduced the weighting in high dividends and value companies. Instead, we increased the quality segment and growth shares. In the second half of the year, we continued to focus on growth, quality, and sustainability, which benefited the fund.

 

What does the fund management team expect for 2024 in terms of global economy and trends?

We expect inflation to fall but remain elevated. We might see a slight recession in the US in Q1 or Q2 2024. Central banks will continue to keep a close eye on price trends and the labour market. There may be a pause in interest rate hikes at the moment, but we do not expect rapid interest rate cuts at this point in time.

Artificial intelligence (AI) is currently a positive trend for the equity markets, with every company that can be linked to AI being hyped on the equity market. Current valuations and profit expectations have fallen somewhat in the second half of 2023. The stock market therefore appears to be fairly valued towards the end of 2023. After a decline in Q3 due to rising interest rates, the stock market has rallied since the end of October as interest rates fell and company results remained very good.

 

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

At present, we slightly favour quality shares, growth shares, and the sustainability factor. However, we are keeping a very close eye on how mid and small caps are performing relative to largely capitalised companies. We are also monitoring the performance of growth shares very closely and, if necessary, we will step up the weighting of high dividends and value shares. For the time being, however, we remain on the wave of quality and large-cap growth shares and are cautiously positive about the equity market.

ERSTE BEST OF WORLD

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.