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.)

"In general, we believe that individual share selection is likely to be more important in 2024 than selection based purely on sectors, regions, or investment style."

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. 

 

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 Andreas Rieger

How did ERSTE STOCK GLOBAL perform in 2023?

After a difficult year for the global equity markets in 2022, the most important indices achieved solid gains in 2023. Falling inflation rates, a better-than-expected development of the US economy and global corporate profits as well as rapid progress in the field of artificial intelligence supported the performance of ERSTE STOCK GLOBAL in 2023 (+13.4%).

The US equity market in particular, with its focus on large-cap growth shares (“mega-cap”) such as Microsoft, Nvidia, and Alphabet, performed well this year. The shares of these companies were sought after due to the stability of their earnings, their solid balance sheets, and the anticipated positive impact of artificial intelligence on their business models.

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

 

What did you focus on last year?

In the fund, we continued to invest in higher-quality growth shares. In terms of sectors, we favoured the technology (primarily semiconductors), healthcare (primarily medical technology), and financials (primarily payment service providers) sectors. Chip developers and manufacturers of production equipment for the chip industry are among the early beneficiaries of artificial intelligence and as such were strongly represented in the fund this year.

We were reducing consumer staples (including beverage manufacturers) over the course of the year, while increasing the fund's exposure to industrials. In terms of the fund's regional focus, we increased our exposure to emerging markets, including India, Indonesia, and China. At the same time, we slightly reduced Western European equities.

 

What do you expect for the new year 2024 and how are you positioning yourself accordingly?

Our longer-term strategy in the fund can be roughly characterised by three main points, some of which overlap. As in previous years, well-managed companies with strong long-term growth potential form the core of the fund. In addition, we see investment opportunities in themes such as regionalisation, automation, and investments (infrastructure, etc.), which we believe will play an important role in the new equity market cycle.

As a third strategic element, we can see the important technological trend of artificial intelligence, where we are already selectively investing as a growth fund. Interesting medium-term investment ideas are available here not only from providers of artificial intelligence infrastructure (such as chip developers, cloud platforms), but also from companies that successfully integrate these innovations into their business model (such as industrial companies).

In general, we believe that individual share selection is likely to be more important in 2024 than selection based purely on sectors, regions, or investment style.

From a short-term perspective, we initially expect defensive equities to outperform cyclical equities in 2024 due to the ongoing weakening of global economic indicators and the falling inflation trend. Subsequently, when market participants anticipate the next upswing phase, we would expect equities to participate more broadly in the upward trend. We think that cyclical shares will be increasingly in demand during this phase. Depending on the data situation, we will therefore adjust the focus of the fund accordingly.

ERSTE STOCK GLOBAL

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.