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. It is also not financial advice – you should consider talking to a professional adviser if you’re not sure whether an investment is right for you.

These investments are designed to be held for the long term. Like all investments, your money 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.

Equity Market Update

In the first quarter of the year, equity markets rallied across the board, breaking all-time highs in most advanced economies. Economic data kept painting a picture of resilience in the US economy, with unemployment remaining at low levels. In the eurozone, unemployment is similarly low, but growth and productivity figures are much weaker.

The UK economy, meanwhile, contracted in the last half of 2023 and kept signalling weakness throughout the first quarter of 2024. In Japan, strong economic performance coupled with above target inflation led to the first rate hike in 17 years, ending an era of negative interest rate policy.

Performance update

The Triodos Global Equities Fund had a positive return of 8.40%, just behind its benchmark of 10.11%. Most successful were the investments we hold in the Information Technology and Health Care sectors. However, investments linked to Renewable Energy were lagging.

The artificial intelligence (AI) theme is still alive and was a key driver of performance. For example, semiconductor companies, Nvidia (+87%), Taiwan Semiconductor (+34%) and KLA Corp (+23%) all had a strong first quarter. These three contributed more than 4% to the overall performance in Q1. The only underperformer in this segment was STMicroelectronics (-12%).

 Return

As of 31/03/2024

Calendar year return

The benchmark for this fund is the MSCI World Index. Please remember that past performance isn't a guide to future returns.

You can find more performance figures, including a cumulative performance chart, on the Global Equities Impact Fund webpage.

Investments that contributed to performance

Nvidia (+87%) reported strong quarterly results and its outlook remains strong – expecting more than 200% growth for the current quarter. It also held its annual technology conference unveiling the Blackwell Superchip which can run a generative AI model, consuming around 25 times less cost and energy.

Organisations in the Health Care sector also made a significant positive contribution to the performance of the fund in Q1. Four names contributed more than 2.5% to the overall performance: Edwards Lifesciences (+28%), Novo Nordisk (+27%), Intuitive Surgical (+21%) and EssilorLuxottica (+15%). All of them showed healthy sales growth numbers and profits. And all of them have a very nice growth profile for the next few years.

Investments that detracted from performance

Our investments linked to Renewable Energy lagged behind. Whilst we see proof of recovery to profitability at Vestas (-10%), the situation at Enphase (-6%) and Acciona Renovables (-28%) is less clear. In solar, Acciona Renewables cut its growth trajectory and announced asset sales to support the balance sheet.

We remain committed to this sector because of its strong impact narrative and because we think that things are moving in the right direction. For example, in wind we’re seeing new orders signed at more favourable terms which could result in better profitability for companies in this segment. Earnings momentum at Vestas is already showing improvement, something not yet discounted in the share price.

Although a lot of investors have given up on companies in the solar sector, we believe in the management of the companies and see opportunities for long term growth. Many of these companies, like Acconia Renewables, have been mostly hurt by external factors (such as declining power prices in Europe and a rising interest rate environment) but we believe that there is nothing wrong with the strategy of the company – and therefore will continue to hold this investment.

Unlike other semiconductor companies in the fund, STMicroelectronics produced a negative return (-12%). Weak numbers and an outlook that missed expectations were reason enough for sell-side analysts to lower earnings forecasts by more than 10%. Weak spots in the industrial and automobile markets were behind this as the company is exposed to these areas. We will continue to monitor this investment, as well as potential alternatives.

Developments within the fund

ResMed was added to the fund in February. This US company is a leader in medical equipment for the treatment of sleep disordered breathing conditions, such as sleep apnea, asthma, and COPD. It has around 50% of the global market share. The impact narrative is clear and supported by a very high score from ISS (100% of sales linked to positive impact: Ensuring Health). The products of ResMed not only improve the life of patients, it also reduces the pressure on health care systems and costs.

Palo Alto Networks was added to the fund in March. This US cybersecurity company offers software, hardware, and related services to medium and large entities in a variety of industries. The products offer significant benefits to thousands of customers globally by preventing and fighting cybercrime and are designed to reduce overall cost to customers.

We decided to exit Cisco as it was underperforming. We have come to the conclusion that the company cannot keep up with the latest trends in the industry. In addition, we see no improvement given the recent sales warnings and weak order intake.