10% rise in ethical and sustainable funds, review shows

Written by Rebecca O'Connor on 26th Apr 2018

The assets under management in ethical and sustainable funds increased by nine per cent in the six months to April 2018, rising to £105bn, driven by investor interest in sustainable investments.

New figures from the Good Investment Review, produced by ethical finance site Good With Money in partnership with ethical advisers 3D Investing, also show that the number of positive impact funds available has increased by 10 per cent since the end of October 2017, to 206.

Over 10 months, since the first review was published in June 2017, the assets under management in ethical and sustainable investment has increased by 21 per cent, up from £87bn.

This is despite eight funds being removed from the 3D Universe – the range of funds (such as OEICs, unit trusts, investment companies or SICAVs) available to UK investors that have some form of ethical or sustainable investment policy.


Download the latest Good Investment Review here


Echoing research this week from Deutsche Bank, 3D Investing’s analysis of the performance of ethical funds shows how adopting a sustainable or ethical policy need not be at the expense of financial returns, and that, if anything, investing for positive impact can improve returns.

Becky O’Connor, co-founder and editor of Good With Money, said: “A weight of research shows better returns over the long term from ethical and sustainable investing. The penny has now dropped for regular investors that it makes no sense to invest unethically or unsustainably if ethical investing is unequivocally financially beneficial too.

“What we are seeing is the early result of that shift in mindset, but expect uptake of ethical and sustainable funds to keep growing rapidly in the coming years. Ultimately, the end game is that an ethical and sustainable approach is a given among all funds, and the way to choose between them is based on which is the most ethical, sustainable or profitable.”


What are the most profitable trends in sustainable investing? Watch the webcast


Notably, there have been several new impact fund launches with a clear focus on meeting the United Nations’ Sustainable Development Goals, including:

  • Standard Life Global Equity Impact
  • Wellington Global Impact
  • Baillie Gifford Positive Change
  • Hermes Impact Opportunity

 

John Fleetwood, founder of 3D Investing, said: “It is highly encouraging to see a move toward the sort of investment strategy represented by 3D Investing.  The launch of multiple funds focussed on making a positive social impact represents a real shift from negatively screened funds and ESG, to a more positive approach which seeks positive social outcomes.” 

The Good Investment Review also includes:

  • An article from Adam Robbins, Senior Investor Relations Manager at Triodos Investment Management, ‘There’s no such thing as a neutral investment’
  • An interview with Sarah Norris, Fund Manager of the new Standard Life Global Equity Impact Fund
  • An interview with Tom Crockford, Lead Portfolio Manager of the new Hermes Impact Opportunities Equity Fund
  • An assessment of the investment opportunities in moving away from fossil fuels, Neil Brown, fund manager with the Liontrust Sustainable Investment team
  • Sector spotlight on Global Equities
  • A look at developing themes in environmental markets, Jon Forster, Fund Manager of the Impax Environmental Markets fund
  • An interview with Luciano Diana, Senior Investment Manager of the Pictet Global Environmental Opportunities fund
  • An interview with Rachel Mountain, from Lendahand Ethex

Adam Robbins, Senior Investor Relations Manager at Triodos Investment Management said: ‘There is no such thing as a neutral investment. When choosing an investment fund, once you have determined the companies or funds you are invested in, the next step is to assess the consequences of your investment. If a company succeeds in its business model, what will be the long-term outcomes, and are you happy with that? We all have a choice about how our money is creating the future.”

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