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.

First quarter market overview and economic outlook

Global equity markets declined sharply in Q1 2025, as investor sentiment weakened amid rising geopolitical uncertainty and fresh concerns about US trade policy. The MSCI World Index posted its worst quarterly performance in almost three years, with US stocks particularly hard hit by fears of new import tariffs announced by President Trump. Wall Street slipped into correction territory in March, just before the tariff announcements expected in April.

European markets fared better, helped by renewed fiscal spending initiatives – especially in Germany – focused on defence and infrastructure. Meanwhile, small and mid-cap stocks performed in line with large caps.

The Purchasing Managers' Index (PMI) data gave a mixed picture: while US services showed a rebound in March, manufacturing activity retreated as earlier gains driven by tariff-related stockpiling faded. Business confidence across the US, eurozone, and Japan remained subdued, largely due to escalating trade risks.

Central bank policy  

Uncertainty around global trade and monetary policy kept central banks cautious. The Federal Reserve held rates steady in Q1 but revised its forecasts to show lower growth and higher inflation expectations, citing the economic impact of proposed tariffs. The European Central Bank continued its rate-cutting cycle but noted increasing internal divisions on the pace of easing. The Bank of England cut rates once and held steady at the second meeting, while continuing to monitor inflationary pressures and trade disruption risks.

Inflation outlook

Headline inflation is expected to decline gradually across the eurozone, UK, and US, although not in a straight line. While a continued disinflationary trend remains our base case, new tariffs and increased government spending could push inflation higher. Risks are increasingly tilted to the upside. Temporary stagnation or small inflation spikes are likely, particularly if global trade tensions escalate or if policy responses lag behind.

Global growth expectations

The global growth outlook remains modest. The eurozone is expected to see a small uptick, driven by interest rate cuts and fiscal spending, though still below historical averages. US growth, while relatively resilient, is under increasing threat from trade uncertainty and weakening business sentiment. The UK is projected to grow at a low rate, with some upside from exports if it avoids being targeted by US tariffs. Japan is expected to rebound from a stagnant 2024, although confidence among businesses has recently dipped.

Performance update

After a strong start in January, global equities declined sharply in March, ending the quarter with negative returns. The Triodos Global Equities Impact Fund returned –2.8% , outperforming its reference index during a difficult period for equity markets.

Despite the market correction, the fund benefited from its exposure to defensive sectors such as telecoms, utilities, and consumer staples. These areas provided stability and helped offset losses in more cyclical and technology-driven parts of the portfolio.

The fund’s exclusion of energy, real estate, and financials continues to shape its performance profile, with the largest exposures in Industrials, Consumer Discretionary, and Information Technology.

Return

As of 31/03/2025

Calendar year return

Benchmark: Bloomberg Developed Markets Index in EUR converted to GBP. Returns are shown as percentages and calculated on the basis that any income has been reinvested. Resturns incorporate the ongoing charges, butdo not take into account the impact of the annual ervice charge on the performance of your investment.

Investments which contributed to performance

Deutsche Telekom: A strong performer within the fund’s Communications Services allocation. Solid earnings, stable cash flows, and investor preference for defensive telecom stocks contributed to the gain.

AT&T: Benefited from renewed investor interest in stable, dividend-paying companies, especially in a risk-off environment. Its strong Q1 results reassured markets on revenue and subscriber growth.

Nomad Foods: A beneficiary of increased demand for packaged and frozen food during a period of economic uncertainty. Its stable business model attracted investor interest.

Danone: Performed well as consumer staples gained favour in a flight-to-safety trade. Results met expectations and its dividend yield made it attractive relative to riskier assets.

Nordex: The wind turbine manufacturer reported robust results, reaffirmed margin guidance, and benefited from renewed investor confidence in selective clean energy names despite wider sector underperformance.

Investments which detracted from performance

Nvidia: Although fundamentals remained strong, Nvidia shares sold off sharply as sentiment shifted against US tech leaders. News from China’s DeepSeek about a competitive AI model raised concerns over long-term dominance.

TSMC: A major chip supplier to Nvidia, TSMC was similarly affected by the broader selloff in AI and semiconductor stocks. No significant change in company outlook, but valuations came under pressure.

Adobe: Fell in sympathy with broader tech declines. Despite meeting earnings expectations, fears around rising competition and high valuation hurt investor confidence.

BESI & Universal Display: These Information Technology names underperformed despite solid earnings. Market rotation away from high-growth sectors and toward value weighed on their prices.

Acuity & MSA: Industrials that underperformed the broader sector, in part due to lack of near-term growth catalysts. Earnings were in line, but not strong enough to buck the risk-off sentiment.

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.