Keep in mind that our commentary on the fund, as well as its past performance, is not a guarantee of what will happen in the future. The value of investments, unlike cash, will go up and down over time. Depending on the value of your investments when you sell, you may not get back as much as you invested.
We’ve tried to explain any technical terms where possible. For further explanation, view our A-Z of Impact Investing (PDF download).
Current economic outlook
These are still uncertain times, both in the financial markets and beyond. And that has an impact on Triodos' investment funds.
We are still dealing with war on our continent, high inflation, and rising interest rates. In the third quarter of the year, stock markets continued to fall as most major central banks tightened monetary policies, and inflation continued to surge across advanced economies. As a result, fears of a financial recession grew during this quarter.
As this fund invests in companies from across the globe, it will be impacted by the markets in areas such as the US, the UK, Europe and Japan.
Inflation in the US has peaked and has started to gradually fall. However, we think it will remain above the Federal Reserve’s target for the next year or so.
For the UK and the Eurozone, it’s a different story. The energy crisis and gas supply cuts could mean inflation will continue to rise and won’t peak until the final quarter of the year. Again, this could have a negative impact on how much people can spend, and therefore the economy as a whole.
On top of that, the UK may experience additional inflationary pressure because of Brexit and the government’s new fiscal plans. Japanese inflation may also peak towards the end of the year, but due to factors specific to their economic situation.
What we think might happen in the future
We think that if things continue as they are, the eurozone and UK may tip over into a full-scale recession. But we’re also planning for a scenario in which things could get worse. This could see the US and Japan also enter a recession, although we think that a global recession will still be avoided.
That being said, it’s not impossible that inflation could come down faster than expected if supply constraints ease. In this case, the eurozone would in that case narrowly avoid a recession.
Keep in mind that these are our speculations of what we think might happen based on the current economic outlook. Planning for multiple scenarios helps us inform our investment decisions but is in no way a guarantee of what may happen in the future.
How the fund has performed
The Triodos Global Equities Impact Fund compares its performance to the MSCI World Index: an index that tracks the worldwide markets. This is because movements in these markets are likely to affect the fund and could explain some of its performance. We’ll refer to this as the benchmark for this fund.
As the table shows, the fund hasn’t performed as well as its benchmark over the last quarter (that is, the period from June to September).
One of the main reasons was due to investments in companies that provide non-essential goods and services. For example, international activewear and footwear companies that meet our sustainable approach to investing.
Consumers may be worried about rising living costs and therefore less willing to spend on non-essential items, such as activewear. This, in turn, affects the profits of the companies who provide them. However, this means these companies are trading at a lower price, and therefore, we believe look good value in the longer term.
The value of the Sterling compared to the Euro also fell during the last quarter, reaching an average of 1.14 in September. This would have had a negative impact on the fund’s returns as it’s quoted in Sterling. When you buy or sell units in this fund, your Sterling is converted into Euros or vice versa. Your total return is therefore subject to the Euro-Sterling exchange rate.
As of 30/09/22
|1 month||3 months||Year to date||1 year|
|Triodos Global Equities Impact Fund KR-dis||-6.85%||-2.37%||-14.13%||-13.85%|
Calendar year return
|Triodos Global Equities Impact Fund KR-dis||6.95%||12.51%||17.69%||-0.82%||13.70%|
Our message to investors
It’s important to remember the bigger picture, and the long-term goal.
Where the fund has slightly underperformed the rest of the market in the short term, this may be because of our commitment to only invest in companies that contribute to a sustainable society and meet our minimum standards. Not investing in certain companies or sectors (for example, oil and gas companies) mean our funds don’t also benefit from their short-term growth.
It’s important to keep in mind the long-term goals of our funds whilst looking at the short-term changes in value. This fund is founded on the belief that sustainable investing can bring financial returns in the long run. For example, we invest in renewable energy companies that could do well as the energy crisis continues. Although, there are no guarantees.
In the end, it’s up to our customers to make their own investment decisions. But it’s important not to make your investment decisions on performance alone. Think about whether aligns with your investment goals, financial situation and risk tolerance – and, of course, your principles.
Stock in the spotlight
Here, we look at the performance of one of the companies the fund invests in, and what we think will happen in the future. Keep in mind that this is our investment analyst's view but is not a guarantee. Investments go up and down in value over time. Depending on the price when you sell, you may not get back as much as you’ve invested.
Nomad Foods is an American-British frozen foods company, with its headquarters in the United Kingdom. Nomad Foods fits in well with Triodos’ Sustainable Food & Agriculture theme as its positive impact stems from the accessibility and affordability of fresh produce, less waste and nutrient preservation, and environmental benefits.
- Accessibility and affordability: Providing healthy produce more conveniently helps and encourages customers to make healthier meal choices. Also, freezing produce may facilitate access to certain foods that are not normally available due to seasonality and/or location. Frozen products may also be cost efficient and even more affordable in certain countries due to the limited supply of fresh alternatives.
- Less waste and nutrient conservation: Freezing food products delays spoilage and extends shelf life. Frozen foods also retain their vitamins and minerals and preserve them for longer periods in comparison to fresh foods.
- Environmental benefits: Through its plant-based protein diet offering, Nomad Foods contributes to the reduction of environmental and animal welfare problems associated with the meat industry.
Recently the performance of Nomad has been disappointing. This is because the prices of the raw materials they use (such as fish, meat, packaging materials, and energy) has increased significantly. They can offset these increased costs with price increases to their customers, but there is a time lag and this has affected short-term profitability.
Find out more about the Triodos Global Equities Impact Fund
Like all investments, your capital is at risk – investments can go down as well as up, currency fluctuations can affect the value of your investment and you may not get back what you put in.
You should ask an independent financial advisor if you're unsure which investment is right for you. Triodos Bank doesn’t offer financial advice.
Find out more about the Triodos Global Equities Impact Fund.