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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.
Fourth quarter market overview and current economic outlook
Global equity markets showed modest growth in Q4 2024, as the MSCI World Index increased, driven mainly by the continued strength of the US dollar. Early in this quarter, investors were cautious due to uncertainties surrounding the US election and concerns over the extent of the Federal Reserve's rate cuts. However, the November election of Donald Trump boosted optimism, particularly in US markets, with expectations for tax cuts and deregulation. Outside the US, markets were less optimistic, especially with fears over potential US import tariffs. Business surveys revealed the US economy outperformed others, while the eurozone, UK, and Japan showed signs of stagnation. Manufacturing Product Manager’s Index (PMI) for major economies ended the year in decline, but the eurozone's services PMI improved.
Central banks and bond yields
The Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) all cut rates in Q4, but their outlooks were varied. The Fed suggested fewer rate cuts in 2025, while the ECB lowered its growth forecast due to possible US tariffs. The BoE kept rates steady in Q4, concerned about inflation. Bond yields rose across major economies, especially in the US and UK, due to inflation fears and reduced recession fears.
Inflation outlook
Inflation in the eurozone, UK, and US has been falling for several months now, and we expect this will continue, but it will take time, and there may be months where it stays the same or goes up slightly. In the eurozone, inflation is getting close to the 2% target, and core inflation (which doesn’t include things like food and energy) is at 2.7% and still falling. In the US and UK, core inflation is higher, but it should slowly decrease. The biggest risks to inflation are global issues such as political instability and trade, which could lead to supply shortages. In the eurozone and UK, we expect people to spend less, which will keep inflation and overall economic growth low.
Economic growth to stay low
We expect some small improvement in the economy in the eurozone, but it will still be lower than historical standards. The rate cuts in Europe should help support growth. In the US, the economy is still strong, but growth is expected to slow in 2025,. Despite this, the US will still grow faster than other regions. Although the UK has started to recover from low growth in 2023, growth will remain low in 2025. In Japan, we saw little growth in 2024, but a stronger rebound is expected in 2025.
Performance update
The fund trailed it’s benchmark in the final quarter of the year. A major factor during this period was the US elections and the influence of the 'Trump trade'. By October, the market was already anticipating a Trump win with investors focusing on US stocks, the dollar, financials, energy, and even cryptocurrencies. Meanwhile, European markets, renewable energy, pharma sectors, and companies exposed to import tariffs struggled.
The fund's underperformance largely stemmed from its limited exposure to the US and the "Magnifiecent Seven" tech giants. This fund holds one of the ‘Magnificent Seven’ Nvidia, as it is the only one that meets our minimum standards requirements.
The stronger US dollar against the euro and the weaker yen contributed to an almost 2% negative impact. Investment decisions, such as overweighting consumer staples and underweighting consumer discretionary stocks like Tesla (+67%) and Amazon (+27%), further hurt performance.
As mentioned above, renewable energy stocks performed poorly, especially after the Trump election results. Companies like Enphase Energy (-35%) and Vestas (-34%) were key contributors to the fund's underperformance, responsible for over 1.5% of the loss.
In terms of adjustments, the fund removed Central Japan Railway and added First Solar and Carlisle to the portfolio in Q4.
Return
Calendar year return
As of 31/01/2025
| 1M | 3M | YTD | 1Y | 3Y avg | 5Y avg | All avg | |
| Triodos Global Equities Impact Fund KR-cap | 4.59% | 2.90% | 4.59% | 11.87% | 5.89% | 6.84% | 9.02% |
| Triodos Global Equities Impact Fund KR-dis | 4.59% | 2.89% | 4.59% | 11.84% | 5.89% | 6.86% | 9.03% |
| Benchmark | 4.40% | 9.24% | 4.40% | 24.73% | 12.47% | 13.46% | 12.65% |
Calendar year return
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Triodos Global Equities Impact Fund KR-cap | 8.00% | 12.78% | -10.69% | 6.95% | 12.41% |
| Triodos Global Equities Impact Fund KR-dis | 7.99% | 12.80% | -10.71% | 6.95% | 12.51% |
| Benchmark | 20.98% | 17.34% | -8.41% | 22.86% | 12.61% |
Investments which contributed to performance
Nvidia: Shares gained 19% in Q4, outperforming its IT sector peers. Nvidia reported quarterly numbers: sales grew almost 100% year over year, driven by AI demand. Management also commented on the demand for the new Blackwell chip and said it would not be able to meet all the demand from its customers for the next several quarters.
TSMC:In the slipstream of Nvidia, TSMC is also a major beneficiary of the AI boom. TSMC is the manufacturer of the chips Nvidia designs.
Edwards Lifesciences: Shares regained momentum in Q4 after months of underperformance as investors questioned whether the high sales growth rates are sustainable. However, at the investor day in December, the company issued a 2025 guidance of 8 to 10% sales growth, above consensus expectations. The longer-term outlook of 10%+ sales growth was also a relief and a positive trigger for the shares.
Investments which detracted from performance
Vestas: Sentiment around Renewables were very weak after the election of Trump. At Vestas, some stock specific items drove the share prices lower as well. The company delivered a weak earnings report again and lowered the full year outlook. Sales were fine but earnings before interest and tax (Ebit) missed expectations in both Power and Services. Free cash flow was also weak. Vestas now sees full year Ebit margins at the low end of the 4% to 5% range. Analysts are still cutting earnings estimates for Vestas.
Elevance Health: Medical memberships disappointed and a timing mismatch between rates and claims were responsible for the weak results. Management lowered the profit outlook for 2024 and 2025. In addition, Trump's remark to “knock out the middleman and get drugs costs down” was not supportive for sentiment around health insurers and pharma stocks.
Advanced Drainage: Shares went lower when management reported a weak earnings report and profits missed expectations. In addition, the outlook for sales was lowered due to volatility in non-residential end markets and the storm impact.
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