Robeco BP US Premium Equities YE USD

US equity markets moved higher in the quieter holiday month of August, with the core S&P 500 Index higher by just over 2%. Value equities outperformed both core and growth equities across the market cap spectrum, led by small caps which outperformed mid and large caps in the month, with small-cap value returning 8.43%, as measured by the Russell 2000 Value Index.

Based on transaction prices, the fund's return was 3.22%. Robeco BP US Premium Equities was more or less in line with the Russell 3000 Value Index, with stock selection adding value while sector allocation detracted from relative returns. From a stock selection perspective, the fund added most value in the industrials and materials sectors, which was mainly offset by picks in the financials and consumer staples sectors. Within industrials, manufacturer Resideo Technologies was the strongest performing holding, rising 25%. Outside of this, a collection of holdings added value in the sector (Uber, C.H. Robinson Worldwide), while avoiding names such as machinery companies Caterpillar and Deere also helped. In materials, CRH Plc was a strong performer, rising close to 19%. On the negative side to stock selection, finance holdings LPL Financial, Fidelity National Information Services and Shift4 Payments all had a lackluster month, while in consumer staples, Keurig Dr Pepper lagged. Contribution to sector allocation was also mixed, with overweight in information technology detracting from relative results, while having no exposure to utilities and overweight in healthcare added to relative returns.

Despite all the policy shifts coming out of Washington this year, with uncertainty surrounding tariffs and trade, the markets have held up relatively well. As it stands, tariffs will probably have an inflationary impact on interest rates going forward. So far, we haven't seen any expectations for earnings to come down, so if earnings growth is stable and interest rates don't get away from us, then the markets should perform reasonably well through the rest of the year. As always, we remain focused on selecting companies from the bottom-up that reflect Boston Partners' three-circle characteristics – attractive valuations, solid business fundamentals, and identifiable catalysts.