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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, so you should consider advice if you’re not sure.
Like all investments, your money is at risk. Investments can go down as well as up, and you may not get back what you put in.
How does the fund work?
Triodos Future Generations Fund invests in companies that are considering the welfare of children and adding benefit for future generations through their products and services, but also in the way they work.
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.
Second quarter market overview and outlook
Global stock markets showed positive growth overall in the second quarter. Initially markets fell in April due to persistently high US inflation, which lowered expectations of interest rate cuts. But in May, markets rose thanks to strong earnings reports and lower US inflation, which made investors less worried about a interest rate hike.
The stock market continued rising in June, especially in the US, with the S&P 500 reaching a new high, driven by optimism around tech stocks. Even though the Federal Reserve changed its plan from three to one rate cuts by the end of the year, investors were not surprised and the market maintained it’s gains.
Looking ahead, we expect headline inflation to continue falling slowly in the US, UK and Eurozone over the remainder of 2024. However higher wage inflation and continued geo-political risks mean this is far from certain.
The impact of this is that we expect low economic growth across the globe, and modest stock market growth. However, global risks mean we are maintaining a cautious approach for the time being.
How the fund has performed
In the second quarter of 2024, the fund fell slightly by -0.66% compared to the benchmark which rise by 0.30%. This was largely driven by the noticeable difference in the performance of different areas of the stock market. Large companies continued to reach new highs, while small and medium-sized companies (where this fund mainly invests) declined in value.
The fund’s return was mainly driven by the Communication Services and IT sector. This reflects strong earnings from Helios Towers, Millicom and Gen Digital.
PowerSchool also announced that it would be acquired by Bain Capital for $22.80per share. Lastly, the largest shareholder of Blackbaud made an improved offer for the company ($80 per share), which the company (after long deliberations) rejected as too low.
Return
As of 31/12/23
| 1 month | 3 months | 1 year |
---|---|---|---|
Fund | -3.18% | -0.66% | - |
Benchmark | 0.44% | 0.30% | - |
Calendar year return
Fund | - | - |
---|---|---|
Benchmark | - | - |
You can find more performance figures, including a cumulative performance chart, on the Future Generations Fund webpage.
Please remember that past performance isn't a guide to future returns.
Investments that contributed to performance
- Fisher & Paykel: The company had strong results and expects more revenue growth because of new products. They also expect better profit margins due to increased production and lower transport costs.
- Helios Towers: The company continues to perform well. Its new strategy to grow and improve profits and cash flow is being well-received by investors.
- Millicom: The company received another takeover offer from its largest shareholder, but the board rejected it as it was too low. They also gave a better outlook for future cash flow and reducing debt. Even though the takeover offer is ongoing, the current share price is higher than the offer price.
Investments that detracted from performance
- Reliance Worldwide: The company is struggling due to weak housing markets and higher copper prices.
- SIG Group: The company had disappointing first-quarter results, and a broker downgraded them, expecting them to miss profit targets. This hurt their stock price.
- SABESP: The stock lost some value even though the company made good progress towards privatisation. The Brazilian currency was also weak in the second quarter, affecting the stock.
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