The sustainable investment party is, without question, the hottest party in town. Just five months into the year and we’ve already seen a spate of sustainable, ethical, environmental, social and governance (ESG) funds launched across the UK and Europe.
From funds investing in clean technology, financing for the UN sustainable development goals to emerging market debt to plain old global and UK companies working hard to develop products and services that will contribute to a cleaner, greener, more sustainable world.
Not all of these are available to little old you and me – a lot of them go into big pension funds and the like. However, quite a few do. Below we highlight five.
Baillie Gifford Responsible Global Equity Income
Launch date: December 2018
Ongoing fees: 0.62% per year
Minimum investment: £1,000
Scottish investment house Baillie Gifford’s Responsible Global Equity Income fund is the first EVER responsible fund in the Investment Association’s global income sector. This, says the manager, is because when it comes to dividends – there really isn’t a whole lot of choice outside of the corporate baddies.
Despite this, managers Toby Ross and James Dow have given it a good go. The fund mirrors their Global Income Growth Fund, but excludes major sin industries like tobacco, alcohol and arms while observing UN Global Compact principles on issues including human rights and the environment. It is less than high impact, though, with top ten holdings including Coca-Cola and Pepsi.
Commenting on the fund, Damien Lardoux, head of impact investing at Good Egg company EQ Investors, says: “Baillie Gifford has a good track record in sustainable investing having successfully launched the Positive Change fund in 2017. This mandate is, in our eyes, more impactful than the Responsible Global Equity Income Fund. However, it is a nice addition to the sector and we will keep a close eye on it to see how the process might evolve overtime.”
Investec Global Environment
Launch date: February 2019
Ongoing fees: 1.5% per year
Minimum investment: £3,000
Awarded a prestigious 5 stars out 5 by sustainable funds experts and long-time Good With Money collaborators 3d Investing, the Investec Global Environment fund is focussed purely on investing in companies that are contributing to the decarbonisation of the global economy and as has absolutely no exposure to the the world’s 100 biggest carbon emitters as identified by Climate Action.
Managers Deirdre Cooper and Graeme Baker say they will favour companies operating in services, infrastructures, technologies and resources related to environmental sustainability and have returned nearly 4 per cent for investors in the 3 months to 28 May.
Commenting on the fund, founder of 3d Investing John Fleetwood says: “This is a particular favourite of mine because it is wholly focussed on environmental impact and has very well developed reporting to show how it is delivering on that impact. This is why it got our top rating.”
Investec UK Sustainable Equity
Launch date: February 2019
Ongoing fees: 1.14% per year
Minimum investment: £100,000
Nabbing a not too shabby 4 stars out of 5 from 3d, the Investec UK Sustainable Equity fund is a welcome addition to the sustainable fund party, being the first UK equity fund to focus purely on small and medium sized businesses contributing to the global sustainable revolution and to report on its positive impacts.
As we found out in our interview with manager Matt Evans back in February, the fund targets UK companies that have strong internal and external sustainability credentials as well as the potential to deliver a strong return. While excluding traditional sin stocks, it also excludes fossil fuel and heavy mining companies.
So far, Evans is shooting the lights out on performance – with the fund returning nearly 14 per cent in the three months to 28 May. This compares to an average of 4.4 per cent from funds in the IA UK all companies sector over the same period.*
The fund is currently only open to larger investment through a financial adviser or wealth manager, however this may change over time.
M&G Sustainable Multi Asset
Launch date: January 2019
Ongoing fees: 1.52% per year
Minimum investment: £500
One of a small but growing selection of sustainable and impact funds at this mega insurance firm, the M&G Sustainable Multi Asset Fund targets a punchy annual return with income of 4 to 8 per cent by investing in companies from all over the globe that the manager considers are having a positive impact on society and the environment.
Like the also recently launched M&G Positive Impact fund, the management team – led by Maria Municchi – actively targets companies that are making a positive social or environmental impact that can be carefully measured and reported on.
Lardoux says: “The Sustainable Multi Asset fund is a half way solution between ESG screened funds and fully impactful funds like M&G Positive Impact. The process starts by excluding exposure to the most controversial sectors and will then invest in ESG leaders. Finally, up to 30 per cent of the fund will be invested in positive impact companies whose core purpose is to directly contribute to the achievement of UN Sustainable Development Goals.
Troy Trojan Ethical
Launch date: March 2019
Ongoing fees: 1.02% per year
Minimum investment: £100
One of the lighter green funds among tour selection, the Troy Trojan Ethical fund is a traditional negatively screened offering from investment house Troy. Launched in response to high demand from the manager’s private clients, the fund mirrors the successful portfolio of its flagship Trojan fund.
Like many ethical funds, it excludes any firm that gets more than 10 per cent of its profits from alcohol, arms, gambling, high interest rate lending, pornography or tobacco. In addition, however, it also excludes companies that get 30 per cent of profits from fossil fuels – which means no energy companies.
Commenting on our selection, Julia Dreblow, founder of sustainable fund analysts SRI Services, says: “On this list there are funds that focus on ESG integration, shareholder engagement, the environment, and then Trojan Ethical – where there is a focus on personal values. While not all funds will suit everyone, I’d say there is something here for most investors.”
*All data is correct to 28 May 2019 and is sourced from FE Trustnet