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Quarterly Client Update: Second Quarter 2025

Quarterly Client Update: Second Quarter 2025

We provide regular strategy updates including portfolio changes and proxy voting, and links to our investment rationales, latest articles, statements, webcasts and videos which explore our thinking on sustainable investment, including the challenges and issues we grapple with in our search for high-quality companies.

Strategy updates: portfolio changes & proxy voting

Find out the latest updates on the strategies we manage including significant portfolio changes and proxy voting.

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Stewart Investors Quarterly Client Update Q2 2025

1 April - 30 June 2025

Quarter update

Risk factors

This material is a financial promotion for the Stewart Investors strategies – Asia Pacific and Japan All Cap, Asia Pacific Leaders, Asia Pacific All Cap, European All Cap, European (ex UK) All Cap, Global Emerging Markets All Cap, Global Emerging Markets Leaders, Indian Subcontinent All Cap, Worldwide All Cap and Worldwide Leaders – and is intended for professional clients only in the UK, Switzerland and EEA and professional clients elsewhere where lawful.

Within the EU/EEA and Switzerland, the European (ex UK) strategy is only available to investors via a segregated mandate account.

Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Emerging market risk: Emerging markets tend to be more sensitive to economic and political conditions than developed markets. Other factors include greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.
  • Indian Subcontinent risk: although India has seen rapid economic and structural development, investing there may still involve increased risks of political and governmental intervention, potentially limitations on the allocation of the strategy’s capital, and legal, regulatory, economic and other risks including greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.
  • Specific region risk: investing in a specific region  may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
  • Currency risk: the strategies invest in assets which are denominated in other currencies; changes in exchange rates will affect the value of the strategies and could create losses. Currency control decisions made by governments could affect the value of the strategies’ investments and could cause the strategies to defer or suspend redemptions of shares.
  • Concentration risk: the European Sustainability and Worldwide Leaders Sustainability strategies referred to in this material invest in a relatively small number of companies which may be riskier than a strategy that invests in a large number of companies.
  • Smaller companies risk: investments in smaller companies may be riskier and more difficult to buy and sell than investments in larger companies.

Where featured, specific securities or companies are intended as an illustration of investment strategy only, and should not be construed as investment advice or a recommendation to buy or sell any security.

If you are in any doubt as to the suitability of our strategies for your investment needs, please seek investment advice.

Investment philosophy

  • We are stewards: Our role is to allocate society’s capital to productive uses, in accordance with our Hippocratic Oath
  • We are long term: Our time horizon is measured in years, not weeks, and we value companies accordingly
  • We invest only in companies contributing to a more sustainable future: We engage constructively as owners to help companies on their sustainability journeys
  • We invest only in high-quality companies: We seek out companies with exceptional cultures, strong franchises and resilient financials
  • We believe capital preservation is important for capital growth: We define risk as the possibility of the permanent loss of client capital

Investment objective

To generate attractive long-term, risk-adjusted returns by investing in the shares of high-quality companies that are particularly well positioned to contribute to, and benefit from sustainable development.

Important information

This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should conduct your own due diligence and consider your individual investment needs, objectives and financial situation and read the relevant offering documents for details including the risk factors disclosure. Any person who acts upon, or changes their investment position in reliance on, the information contained in these materials does so entirely at their own risk.

We have taken reasonable care to ensure that this material is accurate, current, and complete and fit for its intended purpose and audience as at the date of publication but the information contained in the material may be subject to change thereafter without notice.

No assurance is given or liability accepted regarding the accuracy, validity or completeness of this material.

To the extent this material contains any expression of opinion or forward-looking statements, such opinions and statements are based on assumptions, matters and sources believed to be true and reliable at the time of publication only. This material reflects the views of the individual writers only. Those views may change, may not prove to be valid and may not reflect the views of everyone at First Sentier Investors.

Past performance is not indicative of future performance. All investment involves risks and the value of investments and the income from them may go down as well as up and you may not get back your original investment. Actual outcomes or results may differ materially from those discussed. Readers must not place undue reliance on forward-looking statements as there is no certainty that conditions current at the time of publication will continue. 

References to specific securities (if any) are included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. Any securities referenced may or may not form part of the holdings of First Sentier Investors’ portfolios at a certain point in time, and the holdings may change over time.

References to comparative benchmarks or indices (if any) are for illustrative and comparison purposes only, may not be available for direct investment, are unmanaged, assume reinvestment of income, and have limitations when used for comparison or other purposes because they may have volatility, credit, or other material characteristics (such as number and types of securities) that are different from the funds managed by First Sentier Investors.

Selling restrictions

Not all First Sentier Investors products are available in all jurisdictions.

This material is neither directed at nor intended to be accessed by persons resident in, or citizens of any country, 

or types or categories of individual where to allow such access would be unlawful or where it would require any registration, filing, application for any licence or approval or other steps to be taken by First Sentier Investors in order to  comply with local laws or regulatory requirements in such country.

About First Sentier Investors

References to ‘we’, ‘us’ or ‘our’ are references to First Sentier Investors, a global asset management business which 

is ultimately owned by Mitsubishi UFJ Financial Group (MUFG). Certain of our investment teams operate under the trading names FSSA Investment Managers, Stewart Investors and Realindex Investments, all of which are part of the First Sentier Investors Group.

This material may not be copied or reproduced in whole or in part, and in any form or by any means circulated without the prior written consent of First Sentier Investors.

We communicate and conduct business through different legal entities in different locations. This material is communicated in:

  • United Kingdom by First Sentier Investors (UK) Funds Limited, authorised and regulated by the Financial Conduct Authority (reg. no. 2294743; reg office Finsbury Circus House, 15 Finsbury Circus, London EC2M 7EB).
  • European Economic Area by First Sentier Investors (Ireland) Limited, authorised and regulated in Ireland by the Central Bank of Ireland (CBI reg no. C182306; reg office 70 Sir John Rogerson’s Quay, Dublin 2, Ireland; reg company no. 629188).
  • Other jurisdictions, where this document may lawfully be issued, by First Sentier Investors International IM Limited, authorised and regulated in the UK by the Financial Conduct Authority (reg. no. 122512; reg office 23 St. Andrew Square, Edinburgh, EH2 1BB; regcompany no. SC079063).

To the extent permitted by law, MUFG and its subsidiaries are not liable for any loss or damage as a result of reliance on any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment products referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.

© First Sentier Investors Group

News from the quarter

Annual Review 2024

Our annual review shows some of Stewart Investors’ activities in 2024 including:

  • Our ongoing collaborative engagement with other investors and manufacturers – including semiconductor companies – in addressing the problem of ‘conflict minerals’ in supply chains.
  • Reviewing our climate targets to simplify them and ensure their alignment with our investment philosophy, using measures that we believe more closely reflect companies’ real-world emissions performance.
  • Commissioning research to enhance our understanding of the use of animal testing in the healthcare sector and the potential alternatives.
  • Initiating a research partnership with the Access to Medicine Foundation, whose Generic & Biosimilar Medicines Programme we are helping to fund and which aims to increase access to affordable medicines worldwide.
  • Refining our human development pillars, which provide a framework for assessing whether companies contribute to positive social outcomes.

Please also visit your regional area of the website to find information on our human development pillars, climate change solutions, harmful or controversial products, services or practices, engagement and voting, and climate data at a fund and/or strategy level.

Find out more

Collaborative engagement update: tackling conflict minerals in semiconductor supply chains

 “Demand for critical minerals has been dubbed the ‘gold rush of the 21st century’ due to their importance in emerging technologies”1.

Stewart Investors’ engagement on conflict minerals began in 2020 when we identified the issue as a serious human rights risk. This risk is frequently overlooked by governments, companies, investors and consumers. Tantalum, tin, tungsten and gold, collectively known as ‘conflict minerals’, are vital materials for the semiconductor industry and are powering the green transition. Poor traceability along complex supply chains can lead to the inadvertent financing of armed conflict and the abuse of human rights.

Reports from governments2, non-government organisations (NGOs) and the media highlight that mining minerals to produce semiconductors and other electronic and industrial components continues to result in displacement and death. This can have serious reputational and legal consequences for the companies involved.

Apple accused of using conflict minerals

“The Democratic Republic of Congo (DRC) has filed criminal complaints in France and Belgium against subsidiaries of the tech giant Apple, accusing it of using conflict minerals”. Lawyers for the DRC allege that tin, tantalum and tungsten is taken from conflict areas and then “laundered through international supply chains”3. 

Over the years, we have engaged with a number of companies by highlighting the possible reputational risks that arise from the way they procure minerals. The discussions we have had with CEOs often highlight a lack of knowledge of the regulations and of the risks within their own supply chains. Many companies’ supply chain departments are under resourced, leaving them ill-equipped to perform the due diligence checks that are called for by the Organisation for Economic Co-operation and Development (OECD) guidance (and enshrined in US and European regulation). We also found that these departments are frequently considered to be ‘cost centres’ and therefore subject to cuts at times of financial pressure. This may be the main reason why, to date, little progress has been made.

Geopolitical tensions and tariffs on trade may prompt companies to reshape their supply chains

As investors, we consider it our duty to question senior management about reputational risk and frailties in their supply chains. We have therefore been impressing on them the need to allocate more resources to supply-chain management as well as to industry bodies, such as the Responsible Minerals Initiative (RMI) and the Initiative for Responsible Mining Assurance (IRMA), to ensure that best practice is followed and that risks are mitigated.

Understandably, some manufacturers may respond to heightened geopolitical tension and tariffs on trade by repositioning their supply chains. As they do, our fear is that companies might inadvertently overlook the importance of human rights. Accordingly, while there has been pushback against investor engagement, we feel it is necessary to engage companies on this topic. Conflict minerals present a clear, present and ongoing reputational and legal risk to companies that ignore this topic.

We advocate joining industry bodies to make engagement more effective

We would encourage investors to explore and join these bodies to help with more effect engagement:

  • The Initiative for Responsible Mining Assurance (IRMA) membership, for the upstream. Further information on our involvement is available here.
  • The Responsible Minerals Initiative (RMI) Investor Network, for the downstream. Further information on our involvement is available here.

We recently hosted a meeting on behalf of IRMA. It was attended by seven like-minded investment firms, all of whom were impressed by the progress that IRMA has made and by the professionalism it exhibits: it is the gold standard of independent mining audit and assessment. For example, Mercedes Benz insists that suppliers use IRMA audited mines. IRMA has also just announced Google as a new purchasing member. A list of members can be found on IRMA’s website.

While there are costs of membership, we believe these are outweighed by:

1. Connectivity. These organisations provide powerful connections to supply-chain managers and buyers in the automotive, electronics and industrial sectors. This allows investors to assess company culture and commitment to responsible supply chains at a different level from typical investor meetings. For example, at the OECD Forum on Responsible Mineral Supply Chains in Paris in May and at the Investing in African Mining Indaba Conference in Cape Town in February, we had the opportunity to meet the supply chain managers of Apple, Intel, Microsoft, Cisco, BMW and Mercedes.

2. Regulatory updates. The RMI is a good source of information about changes in regulation and their impact on supply chains. For example, recent (February 2025) amendments to the Corporate Sustainability Due Diligence Directive (CSDDD) appear to deepen legal complexity. This may have consequences for companies and investors. RMI membership helps us to keep abreast of such changes.

3. Help with engagement. Because membership of IRMA and the RMI is not obligatory for companies, it is a useful signal that their managers have chosen to adopt best practice. We note many companies – particularly in Asia – claim participation but are not paying members and are not active participants in industry conferences or discussions. Membership of the RMI provides access to their membership list. This makes it easier for investors to determine which companies are leading in their appreciation of the risks in their supply chain – and which are lagging. At this time of supply-chain disruption and repositioning, this could be a source of insight and comfort for investors.

Conclusion: progress takes patience

This initiative is complex and needs to be approached with patience and a long-term perspective. There will be no quick wins – sudden improvements in human rights – here. But this does not deter us. We will continue to advocate best practice as determined by IRMA and the RMI and to highlight the power and importance of correct procedure and independent assessment. And we will continue to raise this topic in meetings with upstream and downstream companies where it is relevant.

We have found that interest in collaboration on sustainable issues has decreased over the past year. But we have no intention of stopping our engagement on this important topic.

 

Footnotes

[1] The White House. President Trump takes immediate action to increase American mineral production. 20/3/25, https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-takes-immediate-action-to-increase-american-mineral-production/

[2] US Government Accountability Office, 07/10/24. Conflict Minerals: peace and security in the Democratic Republic of the Congo Have Not Improved with SEC Disclosure Rule, https://www.gao.gov/products/gao-25-107018.

[3] US Government Accountability Office, 07/10/24. Conflict Minerals: peace and security in the Democratic Republic of the Congo Have Not Improved with SEC Disclosure Rule, https://www.gao.gov/products/gao-25-107018.

Future Asset – careers insights day and impact report

We were delighted to support Future Asset and their careers insight day in June. Investment analyst Sarah Sheard explored the pros and cons of different companies from a sustainability perspective with groups of schoolgirls and alumnae. It was fantastic to see the enthusiasm and participation in the investment workshop.

During 2024, Future Asset engaged with over 2,700 students. Every year, the opportunities Future Asset provides to students continues to grow. Read more in their 2025 Impact Report.

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