A version of this article was originally published on Selftrade.
The Good Investment Review, free to download, offers plenty of reasons to opt for impact funds over mainstream options with your ISA this year.
Here are seven of the best impact funds in the UK, highly-rated for both their financial performance and positive impact, according to 3D Investing. So you can make yours a #NicerISA this year.
Funds with 5 stars out of 5 (3D rating)
This fund is a multi-thematic, global listed equity fund that invests exclusively in companies providing solutions to sustainability challenges. It targets strong long-term growth and risk-adjusted returns.
It’s top ten holdings include Stantec, one of the leading environmental services groups in North America with a focus on environmental design, water supply and waste water disposal, and CVS Health, a US-based company specialising in pharmacy benefit management services and retail clinics.
1-yr return: 11%
The objective of the fund is to enable investors to benefit from growth in the markets for cleaner or more efficient delivery of basic services of energy, water and waste. The companies the fund invests in are mostly provide, use, implement or advise on technology-based systems, products or services in environmental markets, particularly alternative energy, energy efficiency, water treatment and pollution control.
1-yr return: 22%
Among its top holdings in that month were a Portuguese renewable energy developer, EDP Renovaveis SA, and Brambles Limited, an Australian waste technology specialist.
This £480m fund invests in ground-based, solar photovoltaic (PV) assets, to deliver “attractive, sustainable and inflation-linked dividends”, which it pays to investors quarterly. So unlike some of the other funds, the focus is not on capital growth, but income. It has 19 assets in the UK (mostly in the west and south west of England) and four in Australia.
The fund has paid a dividend of just over 6p in the £ every year since it was established in 2014, a yield of 5.8% to 6.1%, targeting 6.58p in 2018.
The Triodos Pioneer Sustainable Pioneer Fund is a collective investment scheme that invests mainly in small and mid-sized global equities that are pioneers in the field of sustainability. The fund invests in four main areas and aims to generate long term capital growth for investors: Climate protections (sustainable energy), Healthy people (medical technology), Clean planet (environmental technology and water), Corporate Social Responsibility (CSR).
The fund also actively engages with companies.
The top ten holdings include Edwards Life Sciences, which produces specialist technologies in structural heart disease and critical care monitoring, Vestas, the wind power company and Xylem, the smart water solutions company, rated among Barron’s top 100 sustainable companies.
1-yr return: 9%
Pictet Global Environmental Opportunities
The fund aims to grow capital by investing in shares and other equity-related securities issued by companies that are active along the “environmental value chain”. It favours companies operating in services, infrastructures, technologies and resources related to environmental sustainability.
It has returned 7.4 per cent over one year. Almost 50 per cent of the fund holdings are in the US. Among the top ten holdings are Aptiv Plc, an electric vehicle technology company, Westrock, a packaging company, and Asml Holding Nv, a leading chip-making company.
The fund aims for long term capital growth and will principally invest in the shares of a broad range of European companies, based on the fund managers’ view of their long term return prospects. It only invests in companies that meet its rules for environmental and social responsibility. The top themes are energy efficiency and waste treatment and the biggest sector represented within the fund is financial services.
It’s top three holdings are DNB ASA, a Norwegian banking group, Danske Bank, the Danish bank and ASML, a Dutch chip-making specialist. It has returned 17.9 per cent over the last 12 months.
The recently launched fund aims to invest in line with the UN Sustainable Development Goals (UN SDGs). The fund’s literature is bold, stating “we believe both financial returns and impact can be achieved alongside each other”. The managers buy shares in “mission-led” companies whose activities, technologies or products are designed to provide solutions in areas such as healthcare, education and poverty. The fund launched just a few months ago, in October 2017, and has not yet published performance or holdings data.