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.)

"The entire year was characterised by the question of when the central banks would finish raising interest rates and when interest rate cuts could be expected again."

Gerhard Ramberger, fund manager ERSTE RESPONSIBLE STOCK GLOBAL

Fund & Performance

ERSTE RESPONSIBLE STOCK GLOBAL is a sustainable equity fund that primarily invests worldwide in shares of selected companies in the developed markets. The fund's investment process is based on fundamental business analysis. When selecting stocks, high-quality, high-growth companies are used. Investing in shares of companies that are pioneers in terms of ecological, social and governance aspects is at the forefront of the investment decision. A holistic ESG approach also takes ethical aspects into account (Note: Please note that investments in sustainable investment funds involve risks as well as opportunities.).

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 Gerhard Ramberger

How did the fund perform in 2023?

ERSTE RESPONSIBLE STOCK GLOBAL closed 2023 in positive terrain despite a significant setback in October.

January got off to a very strong start, with the turbulence surrounding three regional banks in the USA (none of which are in the fund) leading to a market correction in March. This then gave way to the euphoria surrounding artificial intelligence following the positive outlook given by Nvidia in its quarterly results. Share prices were on the rise until the beginning of August, after which a correction set in that lasted several months until the end of October due to the sharp rise in bond yields. 10Y US government bonds were reaching yield levels of 5%. It was not until November that share prices began to rise again.

Note: The companies listed here have been selected as examples and do not constitute an investment recommendation.

The entire year was characterised by the question of when the central banks would finish raising interest rates and when interest rate cuts could be expected again. The hopes of many investors were not realised, and the date of the initial rate cut had to be postponed further and further into the future.

 

What was the focus of the fund in 2023?

Throughout the year, we would focus strongly on technology companies, which account for more than 30% assets under management in the fund and are therefore the strongest sector. We benefited from this primarily due to the boom in artificial intelligence, with the technology sector recording by far the best performance. The positions in the renewable energy sector, where we had invested between 5% and 7% of the fund assets, hurt us; these companies were particularly hard hit by the rise in interest rates, with many quarterly reports on the disappointing side for investors. For a long time, until the beginning of October, we held around 5% cash as we expected better entry prices. The fund is currently fully invested again.

 

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

For 2024, we expect only weak global economic growth and a “dirty” election campaign for the US presidency. The US could slide into recession in the second half of the year after all, while Europe may already be in a mild recession. The first interest rate cuts are expected towards the end of 2024.

The energy issue will be with us for many years to come, especially in Europe, as LNG (liquefied natural gas) is not a solution from a climate perspective due to the high CO2 emissions. With the global measures taken to combat global warming, we are currently heading towards an average global warming of 3 degrees Celsius by 2050. More efforts will have to be made here, because the consequences of 3 degrees more would be devastating.

 

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

We remain heavily invested in the technology sector and are holding on to around 5% in the renewable energy sector because we believe in the growth and share price potential over the next few years. If the signs of a recession in the US were to become more pronounced, we would further reduce cyclical sectors such as industrials and consumer discretionary and strengthen the healthcare sector.


Note: 
In the context of active management, the portfolio positions mentioned may change at any time.

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.