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.

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 geopolitical 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 Triodos Global Equities Impact Fund had a positive return of +2.6%, outperforming its benchmark. The best performers were in the Communication Services and Consumer Sectors.

Our holdings in Health Care underperformed as Edwards Lifesciences quarterly results disappointed and investors questioned the structural growth of its transcatheter aortic heart-valve replacements (TAVR). The company lowered the sales growth outlook for TAVR for the remainder of the year, citing hospital capacity constraints. However, other segments within the company are doing well.

In the third quarter, we removed Nike, STMicroelectronics, and Bridgestone. Whilst Alexandria Real Estate and AstraZeneca were added to the portfolio.

Return

Calendar year return

Remember, past performance isn’t a guide to future returns.

Investments that contributed to performance

eBay performance remains positive after the well-perceived quarterly results that showed further signs that the business is growing again. This, in combination with a very attractive valuation, has seen the shares rise by more than 50% year-to-date.

In May, National Grid announced a GBP 7 billion rights issue to fund a GBP 60 billion, 5-year capex plan. The new plan will deliver 6-8% earnings growth per annum. Of these investments, 85% are green and taxonomy aligned. The rights issue is National Grid’s largest ever and its first since 2010. We are supportive of the plan and see National Grid as the leader in the energy transition. However, the equity raise was bigger and sooner than expected and was combined with rebasing the dividend at a lower level. And, what we see often around the period of a rights issue, that shares are under pressure. In the third quarter, the issuing of new shares was finalised, and the shares recovered.

Resmed reported quarterly results that were positive with sales growing 10% at high gross margins. Comments that popular weight-loss drugs will lift awareness and demand for Resmed, breathing devices were also a tailwind for the shares. Some investors are concerned that GLP-1 medications, used to treat obesity and diabetes, might diminish the market for sleep apnea treatments, but according to CEO Farrell the increased use of GLP-1s will bring many new people into the health-care funnel.

“We believe this will open them up to treating other chronic diseases that they may suffer from, including increased awareness of sleep apnea, ultimately driving new patients into diagnosis and treatment pathways that they may not have previously considered or been treated for,” he said.

Investments that detracted from performance

Novo Nordisk's momentum is fading after a period of very strong performance. Increased competition from rival developers of weight-loss drugmakers, pricing concerns and mixed results from a phase 2 trial were behind the negative sentiment around the stock in Q3.

Adobe quarterly results were above expectations, but the outlook for the next quarter is somewhat disappointing. This raised the question of whether the potential of AI in the offering of Adobe services will generate extra revenues and profits.

You can find more performance figures, including a cumulative performance chart, on the Global Equities Impact Fund webpage.

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.