The ERSTE STOCK VIENNA (feeder fund) invests through the RT Österreich Aktienfonds (master fund) in companies with initial listing on the Vienna Stock Exchange. The investment process of the RT Österreich Aktienfonds is based on fundamental company analysis. When selecting stocks, the focus is on high-quality, high-growth 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.

How would you sum up the last year 2023?

The international equity markets recorded a strong performance at the start of the year, triggered by investors' hopes that the central banks would soon stop raising interest rates (particularly in the USA and Europe) as well as better-than-expected economic growth.

Inflation in the industrialised countries proved to be more sustainable than initially hoped. This forced central banks to continue raising interest rates, which in turn made bonds more attractive than equities, prompting investors to increasingly consider taking profits on equities.

In turn, the topic of artificial intelligence caused a stir with the rapid rise of ChatGPT and similar applications and led to sharp rises among beneficiaries of the new technology such as chip manufacturers and large internet companies. As a result, the gains in the market were focused on just a few companies.

How did the domestic equity market perform?

Unfortunately, the domestic market, with its financial and industrial heavyweights, missed out on some of this development. At the same time, however, financial companies in particular managed to significantly increase their earnings due to higher interest rates and lower loan defaults. As a result, the domestic market appears interesting in a global context.

In addition to financial equities, “special situations” were prominently featured on the market. Do & Co and Vienna Airport, for example, benefited from a return to travelling. Telekom Austria, on the other hand, focussed on the spin-off of the radio tower company EuroTelesites. The losers were largely second-tier shares with a highly cyclical focus and, in some cases, high leverage. (Forthcoming) capital increases at the technology companies AT&S, ams-Osram, and Kapsch were also driving prices.

Note: The companies listed here have been selected as examples and do not constitute an investment recommendation. In the context of active management, the portfolio positions mentioned may change at any time. There is no guarantee that securities will be permanently included in the portfolio.

What developments do you expect in the new year 2024?

The current market environment is dominated by a high level of uncertainty. After years of high government support for consumers, there are signs of a slowdown due to higher interest rates (a burden on the national budget!). At the same time, the political environment remains unstable with wars in Europe and the Middle East. However, we are receiving positive indications from the corporate side: the reduction in inventories, which has led to significant declines in sales and prices in recent months, seems to be slowly coming to an end.

Important economic sectors such as the automotive market, tourism, and the financial sector are optimistic about the future. In other areas, the picture is significantly more mixed: in the construction industry, the favourable trend in infrastructure projects is expected to continue, while the current slump in residential construction is equally likely to persist.

What is your focus in the fund based on this?

We are reflecting this uncertain environment in the fund by applying a more flexible positioning. In particular, we are focussing on companies that should perform well in both weaker and stronger market phases thanks to their business model and strong management.

We believe that share selection within sectors is becoming increasingly important in the current environment. Even if the topic of sustainability has recently fallen somewhat out of the news, we believe that sustainability should continue to be a central component of the investment strategy.

Due to our special situation as a home market with a high level of expertise, we are focusing heavily on the topic of engagement in Austria, among other things, in order to bring our concerns directly to the management and supervisory boards together with international partners. We believe that this enables us to achieve sustainable added value for our investors and other stakeholders, even in this challenging environment.

Note: Please note, that an investment in securities entails risks in addition to the opportunities described.

ERSTE STOCK VIENNA