While the stock markets climbed to new record highs in the first half of the year, the first central banks also initiated a turnaround in monetary policy by cutting interest rates. Will the environment remain positive?

In the Funds exclusive series, the fund managers of selected funds look back on developments in the first half of 2024 and give their assessment of what the markets could expect in 2024. (Note: Prognoses are not a reliable indicator of future performance).

"The main drivers were declines in inflation across Europe and the USA and the resulting hope by the markets of interest rate cuts from the ECB and the Fed in the near future." 

Bernhard Selinger, fund manager ERSTE FAIR INVEST

Fund & Performance

The ERSTE FAIR INVEST invests worldwide primarily in companies which are identified by the management company through a predefined selection process to have a particularly high social utility. The titles are selected with a focus on companies which, through their actions, have a positive impact in the areas of health & well-being, work and society. Furthermore, the investment process is based on fundamental business analysis. 

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

Performance since start of the fund (16.8.2021). 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 Bernhard Selinger

Which companies do you invest in with ERSTE FAIR INVEST?

As a global equity fund, ERSTE FAIR INVEST focuses on the “S” in ESG, i.e. social impact. The main thematic blocks are Health & Wellbeing (physical & mental health), Labour (equal opportunities, diversity & inclusion, supply chain) and Society (education, financial prosperity & financial literacy, and social infrastructure).

The aim is to invest in well-managed companies that make an important social contribution (i.e. that have social impact) with their products and services. Companies that fulfil their social responsibility should also benefit economically in the long term on the back of competitive advantages (employees, customers) and the absence of scandals (fines, loss of reputation).

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

 

How would you sum up the first half of the year on the markets?

Global equity markets have performed very favourably so far in 2024. The main drivers were declines in inflation across Europe and the USA and the resulting hope by the markets of interest rate cuts from the ECB and the Fed in the near future.

The most recent corporate reporting season (Q1 2024) exceeded expectations in both Europe and the USA. In terms of the S&P500, around 78% of companies exceeded analysts' earnings forecasts. ERSTE FAIR INVEST posted a very positive performance in the first half of 2024, benefiting above all from shares in the Labour segment. (Note: Please note that an investment in securities entails risks in addition to the opportunities described.)

 

What are your expectations for the new year 2024?

  • Segment: healthcare & well-being

The Health & Wellbeing segment covers a wide range of things for personal wellbeing, from sport and healthy eating to pets to help maintain mental balance.

Not least against the backdrop of rising global population figures (according to the United Nations, the eight billion people mark was exceeded on 15 November 2022), the broad availability of affordable food plays a key role.

The supply of affordable medicines is particularly important for emerging economies and has a direct social impact.

Example company ERSTE FAIR INVEST: Dexcom (US, EUR 43bn market cap)

◾ Manufacturer of devices for continuous blood glucose monitoring (e.g. Diabetes patients). A small sensor under the skin sends blood glucose data to an external receiver (e.g. smartphone).

◾ The goal is to provide patients with real-time data on blood glucose levels more quickly and easily.

◾ By 2050, the medical costs of poor nutrition (e.g. fast food) could reach around 3% of global economic output (source: WHO).

  • Segment: labour

In the Labour segment, we invest in well-managed companies with a diverse group of satisfied employees and a balanced ratio of female and male managers.

More and more companies are becoming aware that satisfied employees who can identify with the company and the values it conveys are the key to long-term business success, especially in industries with skilled labour (“war for talent”).

Example company ERSTE FAIR INVEST: SAP (DE, EUR 206bn market cap)

◾ Leading enterprise software group in areas such as accounting and human resources.

◾ SAP is a high-tech company that is particularly dependent on qualified employees, which is why there is a strong focus on employee development and retention

◾ Awards for corporate culture in the areas of diversity & inclusion

  • Segment: society

The Society segment focuses on topics relating to education, inclusion and financial literacy as well as social infrastructure (e.g. public transport).

Studies show that affordable access to mobility can significantly reduce social inequality in cities. Children, older people, and socially marginalised groups in particular benefit from this.

Inclusion in the financial sector (e.g. through access to bank accounts, microcredits, financial education/literacy) is seen by the United Nations as a key step towards reducing poverty in emerging countries.

Example company ERSTE FAIR INVEST: Alstom (DE, EUR 7bn market cap)

◾ Alstom is one of the world's leading suppliers of rail vehicles and infrastructure for long-distance and urban transport.

◾ Since its establishment, the Alstom Foundation has supported around 270 social projects in over 60 countries.

◾ Since 2009, for the first time globally, more people live in cities than in the countryside. According to estimates, this percentage will increase to about 65% by 2050 (source: UN).

 

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

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.