Sustainable Opportunities Funds update: Goodbye Climate Assets

August was a difficult month for performance. UK July inflation data came out towards the end of the month and surprised on the upside. Scaled-back interest rate cut expectations meant gilt yields across all durations rose, which affected not only gilts but also our infrastructure holdings. Infrastructure has been a tailwind this year as discounts have narrowed, so it is disappointing to see this unwind. On the other side of the pond, the opposite is true: investors have priced in three interest rate cuts before the end of the year, which is typically a positive environment for equities.

We are almost three-quarters of the way through the year and have experienced a strong equity market, although dollar appreciation has weighed on US investments, with gilts looking very attractive. It is difficult to see this through the negative headlines, but it just goes to show that you shouldn’t believe everything you read.