Increased growth in uncertain market conditions
Confidence on the financial markets improved markedly in 2012, with strong equity and fixed interest returns. This performance contrasted sharply with difficult economic conditions in Europe and the United States. Despite this, record growth of 24% in entrusted funds, to EUR 820 million, was delivered by the end of 2012.
Triodos Bank Privat Banking 2012
Total = EUR 820 million
The composition of these entrusted funds again remained broadly the same, with the majority allocated to asset management through Triodos MeesPierson Sustainable Asset Management. In Belgium, entrusted funds grew by 51 % to EUR 97 million, compared to 31% and EUR 64 million in 2011. In The Netherlands, growth again came predominantly from private individuals, with foundations and religious organisations more reluctant to commit capital.
Private banking customers had little appetite to take investment risks in 2012, reflecting investor sentiment more generally. Instead they concentrated on fixed interest investments or savings products. While this asset class is widely considered to be ‘safe’, its expected financial returns are limited. This is a problem for charities and religious institutions who finance their programmes from investment returns, because it limits their programme expenditure and mission delivery. For Triodos Private Banking, this makes offering alternative instruments, like guarantee funds for loans, more important; because this enables clients to maintain their sustainable impact.
New and existing clients again contributed enthusiastically to Triodos Bank’s capital raising in 2012. More than EUR 12 million in new equity capital was raised, a record for the business unit, predominantly from private individuals and their holding companies.
After decreasing by 2.7% in 2011, Private Banking’s sustainable equity portfolio increased by more than 15% in 2012. This return was slightly better than the overall MSCI index. Since 2006, when Triodos MeesPierson started its operations, Triodos Private Banking has outperformed the MSCI index by 20%.
Sustainable fixed income investments also performed well. The portfolio’s return was 7% in 2012, including social and cultural investments, and without the benefit of tax credits. Excluding social and cultural investments, the return was somewhat higher, (10%) in 2012.
Performance Triodos Equity portfolio versus MSCI
Start = 100 at inception Private Banking in September 2005
Triodos Private Banking’s third investment class of alternatives – or mission related investments – which are only available in The Netherlands, returned a loss of 0.2% in 2012. The continued excellent performance, up 9.7%, of the Triodos Fair Share Fund was balanced by a decline of 3% in the performance of the Triodos Renewables Fund. The Triodos Sustainable Real Estate fund also returned a loss of 12.5%, in line with a struggling Dutch real estate market.