Stock markets continue to demonstrate resilience, despite global trade tariffs and geopolitical headwinds. Our Climate Assets Funds had another solid month, with returns of 2.9% and 3.6% for the Balanced and the Growth Funds respectively (all figures in GBP, unless otherwise stated).
Stock markets hitting new highs
Stock markets hitting new highs can cause investors to feel the urge to take some money off the table, but we believe it is important to maintain a clear focus on the underlying fundamentals. New highs should be viewed as a positive development. Corporate earnings can be viewed as being driven by revenue growth, costs and operating leverage. Broadly speaking, revenue growth is mainly linked to GDP and inflation, while costs and operating leverage reflect company performance. Therefore, if GDP and inflation are expected to be positive over time, then unless companies are performing badly and destroying value, earnings should increase and correspond to rising equity markets.
The rise in earnings alongside price has left valuations at modest levels and sustainable stocks, after a prolonged period of underperformance, are looking attractive compared to traditional sectors. We think that the rally in 2025 is justified and reflects an improving fundamental backdrop for the energy transition and resource efficiency sectors.
July saw renewed focus on animal testing, with UK regulators pushing for more ethical and advanced approaches. The Medicines and Healthcare products Regulatory Agency (MHRA) is exploring alternatives to reduce or phase out animal use, following previous guidance that animal testing should be a last resort. Companies are encouraged to apply the 3Rs—Replacement, Reduction, and Refinement—in safety assessments.
At Quilter Cheviot, we emphasise the importance of scrutinising companies’ testing practices across sectors like pharmaceuticals, medical technology and chemicals. We summarise the key points for investors here.
Caroline Langley
Investment DirectorI have over 16 years of experience in the private client industry and 14 of those are with Quilter Cheviot where I have worked since 2006. I manage private client portfolios (taxable accounts, ISAs and JISAs, trusts, SIPPs, small charities and offshore bonds) working with clients directly or alongside advisers. I am also Deputy Fund Manager for the award-winning Climate Assets Balanced Fund and the Climate Assets Growth Fund.
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Climate Assets Funds
The Climate Asset Funds invests in companies that make a positive contribution to the world, with a strong underpinning of ethical values.