During the final quarter of 2025, the Nomura Climate Solutions Fund's Institutional Class shares demonstrated exceptional absolute returns, significantly outperforming its designated benchmark, the MSCI ACWI IMI. This robust performance was mirrored across global markets, which generally continued their upward trajectory, with international and emerging markets often surpassing the gains seen in domestic U.S. equities. These favorable market conditions were largely underpinned by increasing anticipation of more accommodative monetary policies, a moderation in inflation, and solid corporate fundamentals.
A notable factor contributing to the positive market sentiment and the fund's success was the expectation of declining interest rates. Such an environment has the potential to act as a significant catalyst for utilities-related companies, which are a key component of the fund's holdings. Lower borrowing costs typically benefit capital-intensive sectors like utilities, making their investments in sustainable infrastructure more financially viable and attractive.
This period of strong performance highlights the potential for climate-focused investment strategies to thrive amidst global economic shifts. As economies continue to navigate inflation and monetary policy adjustments, strategic investments in sectors aligned with climate solutions can yield substantial returns. The fund's ability to capitalize on these trends underscores the growing importance of integrating environmental considerations with financial objectives, leading to both positive impact and impressive financial outcomes.
