Fuelling the Next Economy

Two powerful forces have reshaped global markets in 2026. First, the conflict in the Middle East has led to surging energy prices and supply disruptions. Second, the rapid adoption of AI is driving an extraordinary capital investment cycle in data centres resulting in a new era of energy demand. Combined, these forces have reinforced the structural case for investment in energy security, energy and resource efficiency, electrification, and the more efficient digitalisation of economies.

Energy Security and efficiency: Back on the agenda

Governments around the world have stopped thinking about energy as a commodity and started treating it as a matter of national security. The conflict in Middle East this year closed the Strait of Hormuz, choking off ~20% of the world’s oil supply. The head of the International Energy Agency called it “the greatest global energy security challenge in history.”¹ This shock served as a wake-up call: energy security and efficiency are paramount. According to Wood MacKenzie, energy capex spending reached US$3.3 trillion in 2025, and is on track to exceed US$3.8 trillion by 2030 with power supply and grid infrastructure dominating spending.²

The opportunity is wider and more persistent than just renewables. As the cost of energy rises, the payback period declines on investments. Companies that modernise and fortify grids, expand renewable generation, and improve energy efficiency are not riding a policy trend — they are responding to economic drivers. Japan, of course, demonstrated this during the 1970s oil shock, reducing the energy required per unit of GDP by 30% between 1973 and 1988 but prioritising efficiency in industry, households, commercial buildings and appliance.³

The Impax Environmental Market taxonomy covers this Energy Efficiency theme across many of these areas – identifying companies providing efficiency solutions across Building Energy Efficiency, Consumer Energy Efficiency, Power Storage, Smart Grids and Efficient Lighting.

Case studies:

• Siemens Energy (Smart & Efficient Grids, Germany) Siemens Energy plays a critical role in enabling the energy transition by modernising grids, improving energy efficiency and expanding renewable energy capacity. Its three main segments are ‘Grid Technologies’, ‘Gas Services’ and ‘Transformation of Industry’, complemented by a majority stake in the wind turbine manufacturer Siemens Gamesa.
  
• Hubbell (Smart & Efficient Grids, US) Hubbell designs, manufactures and sells electrical and electronic products for a broad range of non-residential, industrial, utility and residential applications. Products include connectors, electric transmission and distribution products and specialised industrial equipment. Hubbell’s products help improve building energy efficiency and resilience and efficiency of power grids.
  
• Trane Technologies (Building Energy Efficiency, US) Trane supplies more efficient heating, ventilation & air conditioning (HVAC) solutions across commercial, residential and public applications. Trane’s building energy management solutions help owners manage energy costs and maximize the bottom line while enabling a reduction in greenhouse gas emissions.

The specific securities identified and described are for informational purposes only and do not represent recommendations. Holdings are subject to change.

AI is Rewriting the Rules of Power Demand

The artificial intelligence boom is not just a technology revolution — it’s also fuelling a surge in energy demand. Every AI query, new data centre, and model training run contributes to an electricity demand at a scale the world has never seen. As a result, power demand is growing at its fastest pace in decades, with grid operators and energy companies scrambling to keep up.

Our experience is in identifying the companies that can reduce this energy demand and “bend the power curve”. We have identified some key levers in making AI compute, and digitalisation more broadly, more efficient, through:

1. More efficient compute – companies enabling faster, more powerful processing for AI workloads through advanced semiconductors, cloud computing and design tools;
2. Reducing AI’s power – through advanced cooling, connectivity, and system efficiency solutions; and
3. Efficiency and delivery of power supply – firms modernizing power infrastructure and grid systems to ensure reliable, efficient energy delivery for AI-driven demand.

Solving these challenges is not new for our Environmental Markets portfolio management team: we have long held positions across this entire value chain, anticipating the intersection of tech and energy. For investors, it means exposure to AI’s growth without betting on just a handful of tech mega caps – instead, you own the critical enablers of that potential growth, companies with fundamental demand and resilient business models benefitting from AI’s rise.

Case studies:

• Synopsys (Efficient IT, US) Synopsys is a leader in electronic design automation (EDA), providing advanced technologies for chip design and verification and solutions that increases design efficiency. In short, their design tools help semiconductors use energy more efficiently.
  
• Amphenol (Cloud Computing, US) Amphenol is a global leader in connectivity solutions, supplying components across automotive, industrial, data centre, consumer electronics, aerospace, and medical sectors. Some of its products support the electrification and decarbonisation of vehicles and play into the secular trend of increased electronic content, thus enabling the transition to connect, “internet of everything” technology.
  
• Hoya (Efficient IT, Japan) Hoya’s mask blanks are used in EUV (Extreme Ultraviolet Lithography) lithography for advanced semiconductors while its glass substrates are used in high-capacity HDDs (Hard Disk Drives) that enable cloud computing.

The specific securities identified and described are for informational purposes only and do not represent recommendations. Holdings are subject to change.

Why Impax Global Environmental Markets Fund, and Why Now?

After a period in which markets were dominated by a narrow group of mega-cap technology companies “The Magnificent Seven”,⁴ conditions are shifting in the strategy’s favour. The market’s attention is broadening to themes like renewable energy, efficiency, and infrastructure – areas that form this strategy’s core holdings. The secular growth drivers behind environmental markets – electrification, grid modernisation, resource efficiency – are intensifying. Meanwhile, we believe many stocks in these sectors still trade at attractive valuations, which we believe presents a favourable entry point.

The Impax Global Environmental Markets Fund offers high-conviction exposure to these structural themes. As of 5/31/2026, the portfolio carried an active share of 86% versus MSCI ACWI, next 12 month (NTM) earnings growth of 11.3% (vs 10.3% for MSCI ACWI), a NTM Price to Earnings ratio of 20.4% (vs 17.6%) and a Return on Equity of 25.4% (vs 22.8%).⁵ For investors seeking global equities exposure to the structural themes defining the next economy, the Fund offers a differentiated portfolio of businesses that we believe are well positioned to benefit.

We believe that the next decade will be shaped by two forces that are already impacting the global economy: the explosive growth of artificial intelligence and the fundamental realignment of energy geopolitics. Each of these forces, on its own, would represent a significant investment theme. Together, we believe they point towards a single, compelling opportunity — the companies building and running the essential systems that the modern world cannot function without.

Learn more about the Impax Global Environmental Markets Fund >>

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1. “IEA head Birol reaffirms that world facing biggest energy crisis in history” Reuters, April 2026 ↩︎
2. Wood Mackenzie, April 2026 ↩︎
3. American Council for an Energy-Efficient Economy, Japan’s Energy Efficiency Policy, April 2022 Yuzo_Yamaguchi.pdf ↩︎
4. Magnificent 7 is a term used to describe a group of seven dominant, mega-cap U.S. technology and innovation companies, including: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) – parent company of Google, Amazon (AMZN), Nvidia (NVDA), Meta Platform  (META) – parent company of Facebook and Instagram, Tesla (TSLA). ↩︎
5. Source: Impax. Active share tracks the disparity between a portfolio manager’s holdings and that of its benchmark index. NTM Earnings growth refers to the expected growth in a company’s earnings over the next twelve months based on forward-looking analyst estimates. NTM Price to Earnings ratio is a forward-looking valuation metric that compares a company’s current share price to its estimated earnings over the next twelve months. Return on Equity measures a company’s profitability by showing how much profit it generates for each dollar of shareholders’ equity. ↩︎

Performance data quoted represent past performance, which does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For most recent month-end performance information, visit www.impaxam.com.

Important Information:

Impax Asset Management LLC is investment adviser to Impax Funds.
Impax funds are distributed by Foreside Financial Services, LLC. Foreside Financial Services, LLC is not affiliated with Impax Asset Management LLC.

You should always consider Impax funds’ investment objectives, risks, and charges and expenses carefully before investing. For this and other important information, please obtain a fund prospectus by calling 800.767.1729 or visiting www.impaxam.com. Please read the prospectus carefully before investing.

Impax Global Environmental Markets Fund Top 10 Holdings as of 5/31/2026
NVIDIA CORP 6.17%, MICROSOFT CORP 5.10%, TAIWAN SEMICONDUCTOR MANUFAC 3.95 %, KLA CORP 3.86%. WASTE CONNECTIONS INC 3.51%, LINDE PLC 3.51%, AMPHENOL CORP-CL A 3.49%, VEOLIA ENVIRONNEMENT 3.22%, SCHNEIDER ELECTRIC SE 3.21%, AGILENT TECHNOLOGIES INC 3.18%. Holdings are subject to change.

Risks
Investments involve risk, including potential loss of principal. Equity investments are subject to market fluctuations, the fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. Emerging market and international investments involve risk of capital loss from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, economic or political instability in other nations or increased volatility and lower trading volume. The Fund is actively managed. The investment techniques and decisions of the investment adviser and the Fund’s portfolio manager(s), including the investment adviser’s assessment of a company’s Issuer Resilience profile when selecting investments for the Fund, may not produce the desired results and may adversely impact the Fund’s performance, including relative to other Funds that do not consider Issuer Resilience factors or come to different conclusions regarding such factors.

About the Index
The MSCI All Country World (Net) Index (“MSCI ACWI”) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI AC World consists of 47 country indexes comprising 23 developed and 24 emerging market country indexes. The developed market country indexes included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom and the United States. The emerging market country indexes included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. Performance for the MSCI ACWI Index is shown “net,” which includes dividend reinvestments after deduction of foreign withholding tax.
One cannot invest directly in an index.