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.

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.

Third quarter market overview and outlook

Global equity markets showed growth this quarter, with small and midcap stocks performing well, leaving equity markets up at the end of September.

Business surveys indicated that US economy retained a solid pace of expansion. While the Bank of Japan introduced rate hikes, the Bank of England cut rates by 0.25%. Falling interest rates is generally positive for stock markets, because it makes borrowing cheaper for businesses.

Looking ahead, we expect core inflation to come down in the US, UK and eurozone over the remainder of the year. The major upside risks to inflation seem to be the world’s unstable (geo)political situation, which could potentially provide a supply shock - an unexpected event that causes a sudden change in the supply of a product or service, which can affect the price. We expect wage growth across the US, UK and eurozone to moderate as inflation is coming down and corporate profit margins come under pressure.

Global economic activity grew by 3.2% in 2023, and although this is low by historical standards, we hope to see similar outcomes for 2024, despite unemployment rising slightly in most advanced economies.

Performance update

The third quarter of 2024 was quite a bumpy one, but equity markets continued to find their way up.

We finally saw small and mid-caps outperforming large caps, possibly driven by the anticipated rate by the US Federal Reserves.

Within the Triodos Future Generations Fund, companies in the Consumer Staples and Health Care sectors performed strongly, and so did holdings in the Consumer Discretionary, Industrials and Materials sectors. Overall, the third quarter was a very positive one for the fund.

Please note, as the GBP version of this fund only launched earlier this year, full year performance data is not yet available.

Investments which contributed to performance

Reliance Worldwide reported good results, with sector peers also benefitting, which showed that market circumstances are improving.

Lion reported solid results alongside a detailed plan to improve margins and returns. The plan seemed to convince the market as the shares performed well. We will look for evidence of successful execution of the plan in the next quarterly results.

The Cooper Companies continued to gain share and grow strongly, whilst also showing profit margin expansion, which the market was hoping to see.

Investments which detracted from performance

Orthopediatrics reported solid results and its first investor day showed a well underpinned plan to reach cash flow break even in 2026. Despite this, the stock underperformed but we retain our confidence in the long-term outlook.

Safaricom saw a combination of concerns over its efforts to expand in Ethiopia and also some political turmoil in Kenya in July.

PowerSchool stock has been flat since the end of July due to the pending takeover by Bain Capital (completed on the first day of the 4th quarter).

Like all investments, your capital 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.

You should ask an independent financial advisor if you're unsure which investment is right for you. Triodos Bank doesn’t offer financial advice.