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 current economic outlook 

Global equity markets declined sharply in Q1 2025, with the MSCI World Index posting its weakest performance in nearly three years. The downturn was driven primarily by US markets, where fears over new import tariffs introduced by President Trump weighed heavily on investor sentiment. Although European equity markets were more resilient – buoyed by increases in EU and German defence and infrastructure spending – the broader mood was dampened by the risk of a global trade conflict. 

Purchasing Manager Index (PMI) data painted a mixed picture. In the US, services activity improved, but manufacturing fell back into contraction. Confidence about future business conditions also deteriorated sharply. The eurozone continued a modest recovery in services, while the UK saw some bright spots despite overall weak economic data. Japan recorded a decline in business activity, with confidence at its lowest since 2020. 

Central banks, inflation and bond yields 

Central banks faced a highly uncertain backdrop. The US Federal Reserve kept rates on hold, while raising inflation projections due to the inflationary potential of tariffs. The ECB continued its rate-cutting cycle, though with signs of caution. The Bank of England cut interest rates once during the quarter and held steady at the following meeting. 

Inflation is expected to decline gradually in the eurozone, US, and UK, although upward risks remain due to tariffs and government spending. Bond yields in Europe rose significantly, reflecting a shift in risk perception linked to geopolitical changes. In the US, yields dropped slightly as concerns about inflation were overtaken by concerns about slowing growth. 

Economic growth outlook 

We expect economic growth to remain low in most major economies in 2025. Rate cuts in Europe should provide some support, though growth will stay below historical averages. In the US, growth has held up so far, but leading indicators suggest deterioration due to uncertainty around trade and fiscal policy. The UK may benefit marginally from being outside the scope of US tariffs, while Japan is expected to recover slowly after a stagnant 2024. However, heightened geopolitical tensions and trade disruptions pose significant downside risks. 

Performance update 

After a strong start to the year, equity markets fell sharply in March, posting the worst monthly performance since the onset of the COVID-19 pandemic in March 2020. The strengthening euro also weighed on returns in euro terms. While earnings season was broadly positive, it wasn't enough to fully counter the pressure from macroeconomic and political uncertainty. 

The Triodos Pioneer Impact Fund performed in line with its reference index for the quarter. During periods of market stress, the fund's relative performance improved, reflecting the quality and resilience of its holdings. 

Notably, companies in the telecom and utilities sectors were strong contributors, including Millicom, KPN, and Terna. Nordex, the wind turbine manufacturer, was another standout performer, supported by strong results and reaffirmed margin guidance. 

On the other hand, stocks in the Information Technology and Industrials sectors were the main detractors. This included companies like BESI, Universal Display, Acuity Brands, and MSA Safety. In most cases, the weaker performance was not due to disappointing company news, as many still delivered solid quarterly updates and outlooks. 

Return

Calendar year return

As of 31/03/2025

Calendar year return

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

Investments which contributed to performance 

Millicom, KPN & Terna: Strong defensive names in telecom and utilities performed well during periods of volatility. 

Nordex: Surprised positively with robust results and confirmation of its margin outlook. 

Planet Fitness: Continued its momentum from Q4 2024, supported by strong earnings and an upgraded full-year forecast. 

Investments which detracted from performance 

BESI and Universal Display: Declined amid broader tech sector weakness despite decent fundamentals. 

Acuity and MSA Safety: Weighed on returns in Industrials, though company-specific results remained solid.