The ERSTE STOCK EM GLOBAL invests primarily in companies based or doing business in global emerging markets. The fund's investment process is based on fundamental business analysis. When selecting stocks, the focus is on high-quality, high-growth companies. A hedge against foreign currency risks is generally not provided, but is possible.

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.

How would you sum up the year 2023?

The global equity markets showed an upbeat performance in 2023. The emerging markets have also made slight gains in the year to date. The regional performance was very mixed. While Latin America made a strongly positive performance contribution, Asia and EMEA were moving sideways. China was the main contributor to the weaker performance in Asia, while South Korea and Taiwan achieved strongly positive developments. Consumption, infrastructure, and technology were the attractive positions here. In Latin America, financial and energy companies in Brazil were the main drivers of high returns.

What priorities did you set for the fund in the previous year?

In the fund, we continued to invest in higher-quality growth shares. Shares from the technology sector continue to account for the largest component of the fund, with a particularly strong allocation in the chip sector.

From a regional perspective, we began to build up more exposure to South Korea, Taiwan, Mexico, and India in the second half of the year, as we are positive about the medium-term growth prospects in the context of attractive valuations and should benefit from the global megatrends (Note: Please note that an investment in securities entails risks in addition to the opportunities described).

In South Korea and Taiwan, we made investments in companies benefiting from the megatrends 5G, data/cloud, electromobility, computer games and artificial intelligence. Companies in renewable energy have not performed satisfactorily in the year to date and were therefore reduced.

What are your expectations for the new year?

The analyst consensus expects the global economy to continue recovering slowly in 2024, with growing regional differences. A positive factor for the emerging markets is the fact that the growth differential between the emerging markets and the industrialised nations will widen again. The positive outlook for rising company earnings in the emerging markets also supports this growth trend.

As far as China's growth drivers are concerned, we expect consumption to normalise, supported by income growth and the reduction in the savings rate to 29-30%. A number of support measures have been introduced in the property sector. India remains interesting despite high valuations as it is one of the most attractive consumer markets in the world with favourable socio-economic and demographic growth drivers. We also continue to regard the Latin America region as an attractive commodity supplier. Mexico will again become more attractive as an “extended workbench” of the USA and as a “friendshoring” market (Note: Please note that an investment in securities entails risks in addition to the opportunities described).

Technology companies (Korea and Taiwan) and consumer shares could possibly benefit this year from the growing middle class in the emerging markets and further digitalisation/artificial intelligence, while industrial companies could benefit from increased infrastructure spending and the expansion of renewable energies and technologies.

On the whole, we are entering 2024 with a moderately positive outlook. The valuations of emerging market companies are attractive in absolute and historical terms as compared to companies from industrialised nations and offer further catch-up potential.

Note: Prognoses are not a reliable indicator of future performance.

What are your priorities in the fund accordingly?

Much like in previous years, well-managed companies with strong long-term growth potential form the core portfolio of the fund. In addition, there are investment opportunities in themes such as regionalisation, automation, consumption, and investments.

We consider the important technological trend of artificial intelligence (AI) to be the third strategic element. As a growth fund, we already invest in this sector selectively. Interesting medium-term investment ideas are emerging here not only in the form of providers of various AI technologies, but also in companies that successfully integrate these innovations into their business model.

ERSTE STOCK EM GLOBAL