Outlook for Triodos SICAV I

It is encouraging to note the increased interest by investors in sustainable investing, resulting in significant growth over the last few years. Triodos SICAV I has grown faster than the sustainable investment market as a whole. Triodos SICAV I expects the growth of sustainable investments to continue in the upcoming year.

Triodos SICAV I distinguishes itself from other funds through its responsible shareholder policies and its strict investment principles. In 2016 the fund will take a look at a number of its investment principles to see if these can be strengthened and to further align these principles with the developments in the market and the progress made by the corporate sector. In 2015, data were gathered to underpin intended changes to the following minimum standards:

  • Genetic engineering: an overview of current positions and initiatives undertaken by selected companies with regard to the use of genetically modified food crops in their products was prepared, showing that a shift in focus from limiting their use to allowing consumers to make a deliberate choice is possible.
  • Corporate governance: an overview of current remuneration practices at listed companies was made, providing the foundation for a potential future threshold for excessive executive remuneration.

Discussions about these potential changes will continue in 2016. In 2016 the fund will also implement new legislation for UCITS V.

Macro-economic outlook

For 2016, the fund expects global economic growth to remain on a par with that of the past four years. In the eurozone, the tailwind for economic growth will not be quite as strong as in 2015. The economies of the Anglo-Saxon countries will continue to expand at a rate of around 2.5%. For China the fund expects a further deceleration of growth in 2016, possibly to below 6%. Other large emerging markets face political problems and falling commodity prices. The fund expects the contraction in these countries to be less substantial than in 2015. In many countries we see no developments that could induce higher inflation in 2016, apart from the base effect of the commodity prices fall disappearing from the equation.

Economic key figures 2014-2016

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Growth national product
(year-on-year)

Inflation
(annual average rate)

 

2014

2015*

2016*

2014

2015*

2016*

 

 

 

 

 

 

 

Source: Research, Delta Lloyd Asset Management

*

projections based on information available on December 31, 2015

United States

2.4%

2.5%

2.5%

1.6%

0.1%

1.6%

Eurozone

0.9%

1.5%

1.5%

0.4%

0.0%

0.9%

Japan

-0.1%

0.8%

1.2%

2.7%

0.8%

0.7%

Emerging markets

4.0%

4.0%

4.5%

5.1%

5.6%

5.1%

 

 

 

 

 

 

 

Equity markets

In Europe, the ECB is expected to maintain its accommodative monetary policy at least until March 2017. The Bank of Japan has opened its money tap further, while in the United States the pace of interest rate hikes will be very modest. European companies benefit from the low euro. Equity valuations are not low in historical terms, but are attractive in comparison with other asset categories. The economic developments in China may cause volatility, as well as the US presidential elections. Due to the lack of liquidity in various markets, such events may cause sharp price movements.

Fixed income markets

Worldwide, there is a great deal of speculation about the number of times that the Fed is expected to raise its federal funds rate in 2016. In contrast to the US stands Europe, where the ECB is highly likely to further reduce its deposit rate, towards a level of -0.5%. The fund expects interest rates in Europe to remain low for a considerable period of time. Large fluctuations (on a daily basis) will probably become increasingly frequent, given the lack of liquidity in the bond market. The sentiment regarding corporate bonds remains cautious, but in general we remain positive about corporate bonds as compared to sovereign bonds.

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