November was a relatively sedate month for global markets, with both Asia and the US making modest gains of between 1 and 2 per cent, while Europe and the UK remained broadly flat in the face of increasing political high jinx.
Reflecting this wider trend, mainstream SRI funds that invest in global and Asian equities fared particularly well – with Stewart Investors’ industry leading Asia and global emerging markets sustainability funds both coming up trumps.
Royal London had a barnstorming month too, boasting three entrants in the top ten, including the top performer. As in the main market, bonds also made a comeback, with two of the sector’s top fixed income managers bringing home market beating returns for investors. Read on to find out who they were.
Royal London Sustainable World
November total return: 2.1 per cent
The first of four entrants for Royal London, the Sustainable World trust returned more than 2 per cent in November, smashing an average return of just 0.25 per cent from other funds in its sector. Its strong exposure to the US (38 per cent) will have buoyed the fund, although with more than half of the portfolio invested in Europe and the UK, good stock picking by manager Mike Fox will have been key. Rentokil and Amazon are the fund’s biggest single stocks, though, making it perhaps unsuitable for some ethical investors.
Henderson Global Care Growth
November return: 1.9 per cent
One of the most accessible social impact funds on the market, the Henderson Global Care Growth fund invests only in companies manager Hamish Chamberlayne thinks will “enhance the environment and life of the community” in which it operates. A consistent top performer, the fund returned 1.9 per cent in November, pushing one year gains to 21.9 per cent and three year gains to more than 52 per cent. The fund is heavily tipped towards the US, with two thirds of the portfolio invested in American companies, while Japan and Asia account for more than 10 per cent. Technology is a big sector, with top holdings including Microsoft, Adobe and Texas Instruments.
Stewart Investors Asia Pacific Sustainability
November return: 1.7 per cent
Long considered one of the stars of the Asia fund world, Stewart Investors Asia Pacific Sustainability is almost always a top quartile performer in its sector – with demand so strong new investors have stump up a hefty 4 per cent fee to get in. This month co-managers David Gait and Sashi Reddy have delivered 1.7 per cent thanks to some big plays in India – including telecommunications behemoth Tech Mahindra, which has seen its share price soar 16 per cent over the past six months on strong profits. The fund is the strongest long-term performer of our top ten, delivering 265 per cent since 2007, though not without some wild times – as is the nature of the beast in emerging markets.
Royal London Sustainable Leaders
November return: 1.5 per cent
Another win for Royal London and manager Mike Fox, UK focused Sustainable Leaders returned 1.5 per cent this month – no small feat considering the fairly dire performance of the wider UK market. Top holdings are very similar to the global fund: Rentokil and Amazon are the top two while Unilever, AstraZeneca, HSBC and Prudential populate the top ten. Financials is the biggest sector, closely followed by telecoms and technology. It aims to outperform the FTSE All Share index on a rolling three-year basis, which it usually does.
Royal London Sustainable Diversified
November return: 1.4 per cent
Fox gets a third top five entrant this month, with Sustainable Diversified returning 1.4 per cent. While the top holdings are fairly similar Fox’s other Sustainable funds, the difference is the mix of assets in Diversified, which can hold bonds (fixed income), property-related investments and cash. Right now around 40 per cent of the portfolio is in fixed income, the majority in UK company debt. Right now the rest is in equities – or shares – again, mainly in the UK, but with a good slug in the US and Europe and a little kicker in emerging markets.
Stewart Investors Global Emerging Markets Sustainability
November return: 1.2 per cent
Another win for emerging market specialists Stewart Investors (formerly First State), the Global Emerging Markets Sustainability fund returned 1.2 per cent in November, pushing one year returns to 17 per cent. The newer fund lags its Asia focused cousin in long term performance, returning 63 per cent over 5 years compared to 94 per cent, however you don’t need to pay an initial fee to get in while you’ll also get exposure to a broader range of emerging markets, including South America, Africa and the Middle East, making it a potentially strong choice for young investors with a long time horizon of ten years or more.
Standard Life Investments Ethical Corporate Bond
November return: 1.1 per cent
Manager Mark Munro had a strong month in November, delivering 1.1 per cent for investors. This reflects a steady improvement in performance for the corporate bond fund that has seen it climb from the bottom half of the sector three years ago to the top third over the last year. The internationally focused portfolio is largely invested in financial companies with The European Investment Bank, Lloyds, HSBC, Royal Bank of Scotland, Bank of America and Aviva all featuring in its top ten holdings. With an annual yield of 2.5 per cent paid in quarterly installments, this could be a good choice for regular income seekers.
Rathbone Ethical Bond
November return: 1.1 per cent
Rathbone Ethical bond is one of the most consistent bond funds around, ranking within the top ten of its sector over almost every time period since 2007. Manager Bryn Jones is also truly passionate about ethics and regularly engages with the companies he invests with to help them improve their practices. This month it has returned 1.1 per cent, driven – again – by a massive weighting to financial companies (over 70 per cent of the portfolio). The annual yield on this one is a hefty 3.8 per cent, again paid quarterly, although Jones does take on a little more risk for this with lower graded debt.
Aberdeen MM Ethical Portfolio
November return: 1 per cent
Aberdeen Multi Manager Portfolio – a ‘fund of funds’ that invests in lots of different ethical and sustainable funds – is another regularly strong offering, delivering 1 per cent this month, 14 per cent over the last year and 45 per cent since 2014. It is perfect for those who want a broad exposure to lots of different ethical and sustainable strategies from all over the world, with top holdings including many of the big name in the space: Stewart Investors Asia Pacific Sustainability, Kames Ethical Equity, Impax Environmental Markets and Jupiter Ecology, to name but a few.
EdenTree Amity International
November return: 1 per cent
One of the original ethical investment houses, EdenTree (formerly Ecclesiastical) boasts a broad offering of funds spanning most regions and asset classes. Amity International, which invests predominately outside of the UK, was established in 1999 and still boasts the same manager – Robin Hepworth – a notable achievement in the fast moving world of finance. It has been laboring under some poor performance, ranking in the bottom third of the sector over three years. Things have been improving since 2016, however, pushing it back into the top third over 1 year and leading to one month gains of 1 per cent.
November’s top ten performing SRI funds
|Fund||1m % total return||Sector avg.||1yr % total return||Sector avg.||3yr % total return||Sector avg.|
|1||Royal London Sustainable World||2.1||0.25||22.2||11.9||49.45||25.7|
|2||Henderson Global Care Growth||1.9||0.45||21.9||16.1||52.5||39.8|
|3||Stewart Investors Asia Pacific Sustainability||1.7||0.2||13.9||10.2||40.8||22.2|
|4||Royal London Sustainable Leaders||1.5||-0.9||19.95||15.8||37.8||27|
|5||Royal London Sustainable Diversified||1.5||0.1||15.4||8.6||32.1||18.1|
|6||Stewart Investors Global Emerging Markets Sustainability||1.2||0.2||16.4||10.2||32.4||22.2|
|7||Standard Life Investments Ethical Corporate Bond||1.1||0.7||6.6||6||14.9||14.3|
|8||Rathbone Ethical Bond||1.1||0.7||10.9||6||20.1||14.3|
|9||Aberdeen Multi Manager Ethical Portfolio||1||0.2||14.3||10.2||44.5||22.2|
|10||EdenTree Amity International||1||0.45||16.9||16.1||33.7||39.8|
*Source: All data is taken from FE Analytics. Returns are gross, i.e. before any fees or charges are deducted, up to 29 November 2017
Only funds that can be bought by private investors through mainstream fund platforms are included.
Want to know which impact funds are really doing good? Check out the latest Good Investment Review, from 3D Investing and Good With Money.