Impax US Sustainable Economy Fund Q4 2025 Review

Fund Overview

The Impax US Sustainable Economy Fund employs a systematic investment approach, targeting large-cap companies in the United States that stand to gain from the ongoing shift toward a more sustainable economic landscape. This strategy meticulously selects firms poised to thrive amid evolving environmental, social, and governance dynamics.

During the fourth quarter of 2025, the portfolio of the US Sustainable Economy Fund surpassed the performance of its benchmark, the Russell 1000. Meanwhile, the broader US equity markets, tracked by the Russell 1000 index, concluded the quarter with only modest gains, reflecting a period of tempered optimism among investors.

Performance Analysis

The US Sustainable Economy portfolio achieved superior results compared to the Russell 1000 benchmark over the quarter. This outperformance stemmed primarily from strategic sustainability tilts and specific stock selections, although contributions from style factors were slightly negative. Sector allocations and industry positioning also played supportive roles in generating excess returns, underscoring the effectiveness of the fund’s systematic methodology in navigating market conditions.

Key Drivers of Performance

Sustainability assessment tools and an emphasis on companies exhibiting high Corporate Resilience scores emerged as pivotal factors in bolstering the fund’s results. Positive attribution arose from deliberate sector overweightings and the strategic exclusion of stocks with lower resilience profiles, such as Meta and Palantir. These decisions allowed the portfolio to capitalize on resilient opportunities while mitigating exposure to higher-risk entities.

Top Stock Contributors and Detractors

Among the standout performers on a stock-specific basis were Eli Lilly (LLY), Advanced Micro Devices (AMD), and Merck (MRK). These holdings propelled the fund’s gains through their robust innovation pipelines, expanding market opportunities, and strong positioning in high-growth therapeutic areas. Conversely, Oracle (ORCL) and Zoetis (ZTS) acted as notable detractors. Oracle faced headwinds from investor concerns over its debt levels, while Zoetis encountered setbacks linked to delays in key product launches, temporarily weighing on performance.

• Positive Contributors: LLY benefited from breakthrough developments in weight-loss and diabetes treatments; AMD capitalized on surging demand for AI semiconductors; MRK advanced through oncology and vaccine innovations.
• Negative Contributors: ORCL struggled amid rising interest rate sensitivities and leverage worries; ZTS was impacted by regulatory hurdles delaying animal health product rollouts.

Portfolio Positioning and Macro Outlook

Looking at the current macroeconomic landscape, the fund is strategically positioned with a diversified mix of secular growth leaders, resilient operators, and sustainable business models. It maintains overweight positions in the Health Care and Information Technology sectors, which are viewed as resilient amid volatility. This allocation reflects cautious optimism, particularly as interest rates trend lower and government spending initiatives gain momentum, potentially fostering tailwinds for innovation-driven industries.

The forward outlook emphasizes adaptability to potential policy shifts, including infrastructure investments and clean energy transitions. By prioritizing companies with strong balance sheets, scalable technologies, and alignment with global sustainability megatrends, the portfolio aims to deliver robust risk-adjusted returns over the medium to long term.

Investment Philosophy and Firm Background

Impax Asset Management, established in 1998, specializes in harnessing investment opportunities from the global transition to a sustainable economy. The firm is convinced that capital markets will undergo profound transformations driven by challenges like climate change, pollution mitigation, and critical investments in human capital, infrastructure, and resource efficiency. These megatrends are expected not only to propel growth for adaptive companies but also to heighten risks for those failing to evolve.

Impax provides a comprehensive array of investment solutions across various asset classes, all designed to achieve compelling risk-adjusted performance horizons. The firm’s offerings include actively managed long-only equity strategies, fixed income portfolios, systematic equity approaches, multi-asset solutions, and targeted investments in new energy infrastructure. With a global footprint encompassing offices in the United Kingdom, United States, Ireland, Denmark, Hong Kong, and Japan, Impax oversees approximately £36.9 billion in assets under management. It boasts one of the largest dedicated teams in the investment management industry focused exclusively on sustainable development themes.

Strategic Insights and Future Considerations

In the context of the quarter’s market dynamics, the fund’s systematic tilts toward sustainability and resilience proved prescient. Sector tilts, particularly in technology and healthcare, aligned well with market rotations favoring quality and growth profiles. Stock-specific selections further amplified alpha generation, highlighting the rigor of Impax’s quantitative models in identifying outperformers.

Moving forward, the portfolio remains vigilant to macroeconomic variables such as inflation trajectories, Federal Reserve policy pivots, and geopolitical influences on supply chains. The emphasis on corporate resilience—encompassing financial health, innovation capacity, and ESG integration—positions the fund to weather uncertainties while capturing upside from sustainability-driven disruptions.

Investors in the Impax US Sustainable Economy Fund benefit from a disciplined, data-driven process that systematically uncovers value in the sustainable transition. This quarter’s results reaffirm the strategy’s ability to outperform benchmarks through a blend of thematic foresight, risk management, and precise security selection.