Triodos Sustainable Pioneer Fund

In Germany, Forum Nachhaltige Geldanlagen awarded the sub-fund with three stars, the highest sustainability rating.

Investment policy

Within the Climate Protection theme, equity performances were mixed, but on balance the theme performed in line with the market. President Trump’s announcement that the US is to pull out of the Paris Agreement only briefly depressed share prices. In the Energy Generation sector, solar and wind energy continue to gain market share, but this did not always translate into higher share prices. The introduction of an auction system for awarding new renewable energy projects put equipment prices and margins under pressure, as a result of which wind turbine manufacturers staged disappointing share price performances. Solar cell manufacturers were stronger performers, as they benefited from price stability and therefore stronger earnings. First Solar’s share price rise reflects the fact that it is the strongest player in this segment, by virtue of its sound balance sheet and favourable growth prospects. SolarEdge, a manufacturer of inverters, also rose sharply. Other companies that realised substantial share price rises included Universal Display (OLED for TVs) and Hydrogenics (fuel cells). The share price of Acuity Brands (LED lighting) fell following the publication of disappointing earnings figures and an uncertain outlook. The sub-fund sold its position in Nordex (wind turbines) in view of the company’s disappointing prospects. Both EDP Renovaveis and Silver Spring Networks received takeover bids, after which the sub-fund sold its shares in the companies. The proceeds were reinvested in companies such as Ormat Technologies (geothermal power) and Cree (LED lighting).

Equities covered by the Clean Planet theme disappointed. Stocks focusing on air purification (exhaust systems) were particularly weak. This was mainly due to reports about the volume growth of electric vehicles, which offer an alternative to the traditional combustion engine. Water stocks, including Xylem and Evoqua Water Technologies, which was recently added to the sub-fund’s portfolio, realised attractive share price rises. The position in Shimano was sold on the basis of the company’s mediocre prospects. The sub-fund also sold its position in Stericycle, which was recently removed from the investment universe. The proceeds were reinvested in two manufacturers of smart electricity meters, Itron and Landis+Gyr.

Among the stocks covered by the Healthy People theme, Align Technologies (dental alignment) and Straumann (dental implants) registered attractive share price rises. Teladoc, an emerging player in eHealth, also went up sharply. Orthopaedics companies and small niche players, such as Ion Beam Applications and Cerus, staged disappointing performances. During the year, the sub-fund switched from stocks with higher market capitalisations (for instance, Zimmer Biomet and Terumo) to smaller-cap stocks. This will keep the balance between large and small caps in line with the guideline defined in the sub-fund’s prospectus. The proceeds were reinvested in Insulet, a manufacturer of insulin pumps, and in orthopaedics company Wright Medical. Fresenius Medical Care from Germany launched a takeover bid for NxStage Medical (home dialysis) and the sub-fund subsequently sold its position in the company. PerkinElmer was removed from the investment universe and hence the sub-fund sold its holding in this stock.

CSR Pioneers was the strongest performing theme; all companies realised attractive share price rises. Particularly strong performers were technology company Red Hat (open source software), Kingspan (insulation material) and car/battery manufacturer Tesla. During the final quarter of the year, Sprouts Farmers Market (organic food) and Owens Corning (building materials) were added to this segment of the portfolio.

Breakdown by theme as at December 31, 2017 (as a % of total assets)

Triodos Sustainable Pioneer Fund – Breakdown by theme (pie chart)

Top 10 holdings as at December 31, 2017

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Name

Country

Theme

% of net assets

 

 

 

 

First Solar

United States

Climate Protection

3.8

Vestas

Denmark

Climate Protection

3.8

Universal Display

United States

Climate Protection

3.6

Xylem

United States

Clean Planet

3.6

Edwards Lifesciences

United States

Healthy People

3.6

Acuity Brands

United States

Climate Protection

3.0

Tesla

United States

CSR Pioneer

2.7

Fresenius Medical Care

Germany

Healthy People

2.6

Red Hat

United States

CSR Pioneer

2.5

Insulet

United States

Healthy People

2.4

 

 

 

 

Performance

Based on net asset value, the sub-fund generated a return of 11.0% (Z-cap) in 2017. During the same period the benchmark rose 12.4%. The sub-fund’s total net assets rose from EUR 174.7 million to EUR 238.2 million.

Any divergence from the benchmark was mainly due to the stock selection. For instance, stocks covered by the CSR theme clearly outperformed the benchmark, but the positive effect of these positions was partly cancelled out by the underperformance of stocks in the Clean Planet segment. The other two themes – Climate Protection and Healthy People – modestly outperformed the benchmark.

Performance based on net asset value as at December 31, 2017
(including reinvestment of dividends, including costs)

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Morningstar
rating

1 year

3 year p.a.

5 year p.a.

10 year p.a.

Since inception p.a.1

1

The inception dates can differ between share classes.

2

The Z-share class and the I-share class have a limited history. Returns prior to the launch of these share classes are based on the returns of the comparable R-share class.

3

Excluding costs.

 

n/a: not applicable

 

 

 

 

 

 

 

 

Triodos Sustainable Pioneer Fund I-Cap

★ ★

11.1%

7.0%

14.6%2

3.3%2

4.3%2

Triodos Sustainable Pioneer Fund I-Dis

★ ★

11.1%

7.0%

n/a

n/a

7.6%

Triodos Sustainable Pioneer Fund R-Cap

★ ★ ★

10.2%

6.1%

13.8%

3.0%

4.0%

Triodos Sustainable Pioneer Fund R-Dis

n/a

10.2%

n/a

n/a

n/a

5.6%

Triodos Sustainable Pioneer Fund KR-Cap

★ ★

15.5%

11.8%

n/a

n/a

15.4%

Triodos Sustainable Pioneer Fund KR-Dis

★ ★

15.5%

11.8%

n/a

n/a

15.4%

Triodos Sustainable Pioneer Fund Z-Cap

★ ★ ★

11.0%

6.9%

14.6%2

3.4%

4.3%2

Compounded benchmark3

n/a

12.4%

9.0%

15.8%

4.4%

8.1%

 

 

 

 

 

 

 

 

Evolution of returns Triodos Sustainable Pioneer Fund

Evolution of returns Triodos Sustainable Pioneer Fund (line chart)

* Triodos Sustainable Pioneer Fund aims to achieve returns that are in line with the market. The sub-fund compares its return with a composite index denominated in euros. This index comprises four sub-indices that are related to the four themes of the sub-fund. The index for the Clean Planet theme is the FTSE Environmental Opportunities All-Share Index (30%). The index for Climate Protection is the WilderHill New Energy Global Innovation Index (30%). The index for Healthy People is the MSCI World Health Care Equipment & Services Index (30%). The index for CSR Pioneers is the MSCI Small Cap World Index (10%). These are generally accepted indices for (non-sustainable) worldwide diversified equity funds. The investment policy that is pursued by Triodos Sustainable Pioneer Fund is not aimed at replicating or outperforming the benchmark. The sub-fund may deviate from the benchmark because it only invests in companies that meet its strict sustainability criteria. The fund believes that in the longer term sustainable investments offer more stable and higher returns than non-sustainable investments. The fund therefore tends to invest in companies on the basis of a long-term investment horizon.

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