Interview with fund manager Andreas Rieger
What sort of performance did ERSTE STOCK GLOBAL achieve in the first half of 2022?
The high and continuously rising inflation rates have resulted in a dynamic increase in long-term interest rates, especially real ones. The increase in interest rates led to higher discount factors for asset valuation, which put pressure especially on the valuations of structural growth companies. This trend of falling valuation was particularly pronounced in the software industry, semiconductors, and logistics. Value shares, on the other hand, i.e. companies with lower valuations spearheaded by oil and gas companies, outperformed the broad market in this environment. Given the focus of ERSTE STOCK GLOBAL on long-term growth shares, this scenario had a negative impact on the fund, which lost about 21% in the first half of 2022.
How is ERSTE STOCK GLOBAL currently positioned? What is your focus in this fund?
The focus of the fund is – and will consistently remain – on growth shares. We continue to prefer companies that can increase their sales and earnings continuously over an economic cycle. In terms of sectors, we like the software industry, fintech, and life sciences. In the first half, we stepped up our allocation in consumer staples (beverages, household goods) due to the attractive defensive features of these companies in the current environment. As inflation protection, we hold selected shares in the energy and industrial sectors, bearing in mind quality and growth here as well.
What is the outlook for the fund in the coming months?
The bear market that we are currently in has hit growth shares particularly hard. After the significant corrections and the decline in valuations we can see interesting investment opportunities for long-term investors in growth companies with intact fundamental outlook. A falling trend of inflation/interest rates would lend support to the growth segment. Investors should be selective. Stock picking will be crucial in the coming months. Companies with sustainably above-average growth rates – especially in the ongoing global economic downturn – should soon be in high demand again by investors. The Q2 reporting season starting in July and the business outlooks should provide first insights.