Triodos Future Generations Fund: Investor Update Q1 2026

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 the full amount you invest.

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

The first quarter of 2026 was marked by volatility in global equity markets, driven largely by the escalation of conflict in the Middle East. The quarter began on a cautiously optimistic note, with markets moving slightly higher by the end of February.

Later in the quarter, equity markets experienced a sharp decline, particularly in EUR terms, as investors were rattled by the geopolitical developments. From an economic perspective, the war led to a global energy supply shock, immediately visible through rapid increase to oil prices. The prospect of higher inflation, lower economic growth, and reduced corporate profits weighed heavily on investor sentiment, resulting in rapid decline to select sectors.

Before the conflict started, markets had shown resilience, supported by solid corporate performance and encouraging inflation data. However, the geopolitical shock overshadowed these positive factors, shifting investor focus toward risk management and defensive positioning.

Performance update

The first quarter wasn't strong for the Triodos Future Generations Fund, mainly due to concerns about how AI might affect software companies. The strong performance of energy stocks benefitted the benchmark, but the Future Generations Fund, of course, doesn't contain oil and gas holdings.

Some holdings disappointed. Duolingo shifted focus to growing its user base rather than making money immediately. While this strategy makes sense long-term, it hurt short-term earnings growth and put pressure on the stock. RWC also struggled due to high copper prices and weak housing markets.

Investments which contributed to performance

• Bright Horizons launched a $600m buyback program, repurchasing shares.
• Millicom showed positive results; cutting costs quickly, improving output and increasing profits from each sale. This is contributing to gains in profit margin.
• SABESP reduced running costs, gaining good progress on their project to bring universal access to clean drinking water in Sao Paolo.

Investments which detracted from performance 

• Duolingo changed strategy to promote user growth, instead of making more money from existing users. They do not see use of AI as a threat to their service.
• Genuit Group outperformed the current market, but felt the cost of high energy prices and changes to the housing market and interest rates.
• Geberit were also hindered by high gas prices, although impact appears to be minimal as the company currently only spends 0.2% of their revenue on gas.

Return

As of 31/03/20256

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.

Developments within the fund

The fund saw no portfolio changes within the quarter.

Looking ahead

We remain confident in our approach. Our careful selection process helps us find quality companies with good growth potential at reasonable prices. Despite recent market challenges, we believe our companies are well-positioned for the future.

Investing glossary of terms