Interview: How does the ERSTE STOCK WORLD fund invest?

As previously discussed in our investment blog, ERSTE STOCK WORLD – a globally focused equity fund resulting from the merger of ERSTE BEST OF WORLD and ERSTE STOCK GLOBAL – has launched in mid-March.

What strategy does the fund pursue, how is it positioned in the current environment, and what opportunities does the new focus provide? We spoke to Andreas Böger, fund manager of ERSTE STOCK WORLD, about these issues.

ERSTE STOCK WORLD is a global equity fund that invests worldwide. What criteria do you apply in the construction of the portfolio?

Andreas Böger: We pursue two key approaches within the fund: firstly, a bottom-up approach. Here, we analyse individual companies in great detail before turning our attention to broader themes or sector trends. In doing so, we focus on the quality factor, seeking out companies that operate globally and have a strong market position.

Secondly, we complement this approach with a top-down view of trends and market phases. This allows us to actively adjust the portfolio in line with market developments. We can weight regions differently or overweight or underweight individual sectors and factors. This combination defines our approach and distinguishes it from that of the previous funds, which are now being merged into ERSTE STOCK WORLD.

Speaking of the quality factor – what exactly do you mean by that?

Quality equities are established companies with stable business models, a global reach and, ideally, sustainable growth potential. Typically, these companies have the power to set prices and are less vulnerable to economic fluctuations thanks to stable, recurring sales revenue.

One example is the healthcare sector: many established companies generate revenue from licences and patents, and demand for medicines remains relatively stable even during economically challenging periods. As a result, these companies are less dependent on market cycles.

From your perspective, what makes these quality equities interesting?

A good example is the period of rising interest rates that we saw a few years ago. After a brief adjustment phase, high-quality companies were having fewer problems with this situation because they would often run their operations on significantly lower levels of debt – and were (N.B. and are) therefore less sensitive to higher interest costs. Also, this quality is usually self-reinforcing. Thanks to the solid earnings and high cash flow these companies generate, they can invest more in innovation and are thus able to further expand and strengthen their strong position. Even when cash flows are channelled into dividends or share buybacks, this is positive for investors.

In what sectors would you find such companies?

The portfolio is relatively broad and diversified across a wide range of sectors. So, in addition to technology and healthcare, which I’ve already mentioned, we also have the industrial, consumer and financial sectors, to name but a few.

A classic example of a quality company is Mastercard. Credit cards are used regardless of the economic cycle. Or, to stay closer to home: Deutsche Telekom. However, we also invest in other regions and emerging markets – for example, with Mercado Libre, the Amazon of South America, or the Japanese Hoya Group, which manufactures specialist products in the healthcare and technology sectors.

Before the war in Iran began, stock markets in Europe and Asia had caught up somewhat with the U.S. market, which had been performing very well for a long time. How do you respond to this?

It is true that US equity markets have fallen slightly behind lately and that the focus is increasingly shifting to Europe and Asia. This is an example of how we can play to the strength of our top-down approach: we have already reduced our exposure to the United States slightly in response to the fact that other regions of the world are also performing well at present.

Regarding changes to the investment strategy: what other adjustments have you made to the portfolio recently?

Over the past year, we have seen a significant broadening of diversification – not only in the market, but also within the fund. Performance is no longer driven solely by the well-known “Magnificent 7”. Other sectors, such as banks and industrial companies in Europe or technology shares from Asia, have also posted significant gains. We have been actively pursuing this diversification within the portfolio for some time now. Whilst we held about 50 shares in 2023, the portfolio now contains some 80 positions.

In 2026 to date, we have seen a pronounced market rotation; for instance, software companies are performing less convincingly. The dominant theme at present is, of course, the war in Iran. From a sector perspective, energy companies and utilities have performed strongly this year, partly because these sectors are benefiting indirectly from the AI boom and rising electricity demand. However, I am convinced that our dual approach – that is, a focus on quality combined with the ability to make top-down adjustments – will serve us well in periods of heightened volatility such as the current one.

So, AI will also be a topic for ERSTE STOCK WORLD?

Yes, we do have traditional technology companies such as Broadcom and Alphabet in our portfolio. However, the sector has evolved further. In 2023, it was relatively straightforward to invest in AI by focusing on individual semiconductor companies. Since then, the sector has broadened – further service providers across the entire supply chain have emerged, such as those addressing energy requirements, which I mentioned earlier. Currently, the main focus is on who really benefits from AI, and which business models are likely to come under pressure as a result of AI.

In our bottom-up approach, we specifically seek out companies that are convincing in the long term within the context of AI. At the same time, using a top-down approach, we monitor which sectors are being positively or negatively affected and adjust the portfolio accordingly.

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Risk information ERSTE STOCK WORLD

The fund employs an active investment policy and is not oriented towards a benchmark. The assets are selected on a discretionary basis and the scope of discretion of the management company is not limited.

Further information on the sustainable orientation of ERSTE STOCK WORLD and the disclosures in accordance with the Disclosure Regulation (Regulation (EU) 2019/2088) and the Taxonomy Regulation (Regulation (EU) 2020/852) can be found in the current prospectus, point 12 and the annex “Sustainability principles”. When deciding to invest in GreenStars Global Equities, all characteristics or objectives of ERSTE STOCK WORLD as described in the fund documents should be taken into account.

 

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