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, where this fund has a focus, performing especially 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  

Overall the fund has delivered positive returns, although it has lagged behind its benchmark this year.  

The second quarter reporting season was quite positive for most holdings in the Fund, with companies like Allegion, Nordex, Qiagen and Terveystalo upgrading their full year outlook.  

The third quarter was also positive for renewable energy holdings, First Solar and Acciona Renovables, who both published good results. 
 
August saw negative fund performance due to some holdings in the industrial sector falling.  

Recently added holding Alk-Abello, performed positively after it increased its outlook for the third time this year. 

The FED lowered interest rates as expected with 50 basis points. Small-and midcaps performed slightly better than their large cap counterparts. Historically, small- and midcaps perform often well in times of central banks lowering interest rates.  

Calendar year return

Investments which contributed to performance

Mueller Water reported impressive results and upgraded its full-year outlook which saw their shares perform well.  

By the end of this year, the acquisition of DS Smith by International Paper (IP) should be complete. DS is acquired in shares and until that time DS will trade in line with IP shares. 

Allegion posted a better outcome than expected with its second quarter results, primarily driven by stronger international results, while Americas was in-line. The company raised its 2024 adjusted EPS guidance. 

Investments which detracted from performance  

BESI noted slow uptake in the mainstream assembly market and in China, particularly for high-end smartphones, automotive and industrial applications. Despite this, BESI has a bright future and is a core holding of this fund. They boast a strong combination of robust impact and solid financials.

GN Store Nord’s quarterly results were slightly below expectations, but the hearing aid manufacturer’s longer-term outlook looks promising. 

Strategic Education saw slightly weaker performance but reported solid quarterly results, there seemed no clear reason for the underperformance and we retain our confidence in the company over the long-term. 

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.