Triodos Sustainable Pioneer Fund

In the Netherlands, Triodos Sustainable Pioneer Fund received the Thomson Reuters Lipper Fund Award for best performing fund over 3 years in the category Equity Global Small and Mid Caps. The sub-fund received this award based on its financial performance. In Germany, Forum Nachhaltige Geldanlagen awarded the sub-fund with three stars, the highest sustainability rating.

Investment policy

Climate protection was the weakest performing theme. The share prices of solar cell manufacturers fell sharply. This was largely attributable to overcapacity in the solar market, which resulted in margin pressure and lower earnings. The outcome of the US presidential election and the bankruptcy of SunEdison reinforced the negative sentiment. The position in this segment was reduced by selling SunPower and Trina Solar. Wind turbine manufacturers fared better, partly due to positive reports about the US wind energy market. In the energy efficiency sub-sector PowerSecure International and Opower were taken over. The proceeds from the sale of these positions were reinvested in Silver Spring Networks (modernisation of electricity networks).

Healthy People was the strongest performing theme. Particularly strong performers included Edwards Lifesciences (heart valves), NxStage Medical (dialysis systems) and Straumann (dental implants). The weight of this theme was raised in view of its defensive nature and the favourable growth prospects. Becton, Dickinson and Company, Oxford Immunotec Global (diagnostics) and Teladoc (eHealth) were added to the portfolio.

Shares of healthy/organic food manufacturers were in demand. WhiteWave Foods (CSR Pioneer) was acquired by Danone. Wessanen was another strong performer. The position in SunOpta was sold because of mediocre growth prospects.

Share price performances for stocks covered by the Clean Planet theme were mixed. Companies such as Xylem (water infrastructure), Tenneco (exhaust systems) and Waste Management (recycling) benefited from favourable earnings trends in market segments with attractive growth potential. The share price of Stericycle came down sharply following the publication of disappointing results by the company. The position in Chinese water stocks was reduced. The sub-fund established a position in Johnson Matthey (catalysts) and Shimano (bicycle components).

In the CSR Pioneer theme the position in restaurant chain Chipotle Mexican Grill was sold because of mediocre prospects. The company was later removed from the Universe. Proceeds were reinvested in UK paper manufacturer DS Smith.

Breakdown by theme as at December 31, 2016 (as a % of total assets)

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

Top 10 holdings as at December 31, 2016

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Name

Country

Theme

% of net assets

 

 

 

 

Edwards Lifesciences

United States

Healthy People

4.1

Tesla Motors

United States

CSR Pioneer

3.9

Vestas

Denmark

Climate Protection

3.5

Acuity Brands

United States

Climate Protection

3.4

Xylem

United States

Clean Planet

3.2

Becton, Dickinson and Company

United States

Healthy People

2.9

PerkinElmer

United States

Healthy People

2.8

LKQ

United States

Clean Planet

2.7

Tenneco

United States

Clean Planet

2.7

Waste Management

United States

Clean Planet

2.7

 

 

 

Performance

In 2016, the total net assets of Triodos Sustainable Pioneer Fund grew from EUR 161.9 million to EUR 174.7 million. During this period, the sub-fund (R-Cap) realised a return of -7.4%, while the benchmark rose 6.6%.

The sub-fund’s share price was held back by the performance of green utility companies and solar cell and wind turbine manufacturers covered by the Climate Protection theme. Climate Protection was the weakest performing theme during the reporting period. Investors believed that the surprising outcome of the US presidential election and Trump’s preference for fossil fuels would have a negative impact on wind turbine and solar cell manufacturers. By extension, shares of green utility stocks also depreciated. This was not fully offset by the favourable share price trend for cyclical companies covered by the Clean Planet theme and organic food manufacturers within the Healthy People segment. In the Healthy People segment investors were wary of medical technology stocks. The potential repeal of the Affordable Care Act (Obamacare) in the US was one of the sources of concern.

Figures show that over the long term sustainable investing outperforms worldwide stock exchange markets. As a result the sub-fund foresees the disappointing results over 2016 to be levelled out in the coming years. Having said that, in the coming year, the attractiveness of companies focusing on (sustainable) energy transition and clean transport will be determined partly by the policies pursued in this area by the US government as well. Time will tell whether the lower cost price of solar and wind energy and the growth of ‘green jobs’ will be able to withstand the political headwinds.

Performance based on net asset value as at December 31, 2016
(including reinvestment of dividends, including costs)

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Morningstar
rating

1 year

3 year p.a.

5 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

 

★ ★ ★

-6.7%

9.7%

13.4%2

3.6%2

Triodos Sustainable Pioneer Fund I-Dis

 

n/a

-6.7%

n/a

n/a

6.4%

Triodos Sustainable Pioneer Fund R-Cap

 

★ ★ ★

-7.4%

8.8%

12.8%

3.3%

Triodos Sustainable Pioneer Fund R-Dis

 

n/a

-7.4%

n/a

n/a

2.0%

Triodos Sustainable Pioneer Fund KR-Cap

 

★ ★ ★

8.0%

10.5%

n/a

15.4%

Triodos Sustainable Pioneer Fund KR-Dis

 

★ ★ ★

8.0%

10.5%

n/a

15.4%

Triodos Sustainable Pioneer Fund Z-Cap

 

★ ★ ★

-6.7%

9.7%

13.5%2

3.7%2

Compounded benchmark3

 

n/a

6.6%

14.2%

16.0%

4.1%

 

 

 

 

 

 

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 in the short term. 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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