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 speaking to a professional adviser if you're unsure 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.

How does the fund work?

The Triodos Future Generations Fund invests in companies that are considering the welfare of children and adding benefit for future generations through its products, services, and also the way in which it works. 

Triodos Future Generations Fund focuses on small and medium-sized (midcap) businesses that we have strong conviction in.

When looking for solutions to address the world’s most pressing challenges, especially in impact investing, it is easier to find companies focused on a single product or a single service, as is often the case with small and midcap companies. These small and midcaps are an attractive way to get exposure to a single investment theme or angle, such as child welfare.

Moreover, smaller companies with a strong and viable strategic proposition can have fantastic growth potential, giving them the opportunity to be the big players of tomorrow.

Remember with smaller, entrepreneurial businesses, there’s also more risk that the business might not perform as well as expected. If they decrease in value, investors could get back less than they put in.

First quarter market overview and outlook

The first quarter of 2025 was difficult for global equity markets, with the MSCI World Index declining sharply – the worst quarterly performance in nearly three years. US markets were particularly hard hit, as investor optimism at the start of the year gave way to rising concern over new US import tariffs and broader policy uncertainty following the presidential election.

In Europe, sentiment was more stable, supported by announced increases in defence and infrastructure spending at both the EU and German level. Nevertheless, trade tensions weighed on all major regions. Meanwhile, business surveys showed mixed signals – an uptick in US services activity contrasted with weakening confidence in manufacturing, and in Japan, business activity declined for the first time in five months.

Central banks and inflation outlook

Central banks faced elevated uncertainty. The US Federal Reserve kept interest rates on hold, revising down its growth outlook and raising inflation forecasts. The European Central Bank (ECB) continued cutting rates, though with a more cautious tone. The Bank of England cut once and then paused, weighing inflation risks against a weak growth backdrop.

Inflation is expected to gradually ease in the eurozone, UK, and US through 2025, though the process may be uneven. Tariff-related supply pressures and increased government spending could create fresh inflationary risks.

Economic growth expected to remain modest

We continue to expect low economic growth across major markets. The eurozone may benefit from rate cuts, but overall growth will remain below average. In the US, while recent activity has been resilient, forward-looking indicators have turned more negative due to policy uncertainty and weaker business sentiment. The UK is on a slow recovery path, and could see a small boost from export demand as it remains (for now) outside the US tariff regime. Japan is expected to rebound modestly after a flat 2024.

Performance update

The Triodos Future Generations Fund posted a small negative return in Q1 2025. While this was a challenging environment for equities overall, the fund performed well relative to its reference index.

Several investments in the Consumer sectors stood out. Stride, for example, continued to deliver strong results, defying a short-seller report that had suggested profitability would collapse. Strong performance also came from the Communication Services sector, where both Helios Towers and Sanoma reported earnings that exceeded expectations.

More defensive sectors benefited from a market rotation in response to growing uncertainty. However, the Health Care sector struggled in Q1, with disappointing earnings and policy concerns in the US weighing on performance.

Additionally, the fund’s underweight position in the US dollar provided a relative performance boost, as the dollar weakened during the quarter.

Calendar year return

As of 31/03/2025

Please be aware that, as this is a new fund, performance and returns information is not yet available for all time periods shown below.

Investments which contributed to performance

Stride: Delivered another strong earnings beat, defying short-seller claims and boosting investor confidence.

Zurn Elkay: Slightly exceeded expectations and raised guidance, supported by resilient end markets and solid margins.

Mueller Water: Performed well and benefited from post-election optimism around US small and midcap companies.

Investments which detracted from performance

Reliance Worldwide: Reaffirmed its outlook but suggested that performance in EU markets would be at the lower end of expectations.

Helios Towers: Issued an updated forecast that mostly aligned with expectations, offering little surprise to investors.

DSM-Firmenich: Met expectations and upgraded guidance, but results were already priced in by the market.