The Good Investment Review: April 2020

Written by Good Money Girl on 30th Apr 2020

Investors ploughed a planet-saving £33 billion into ethical and sustainable funds in the last six months – a 31 per cent increase, according to the latest Good Investment Review.

Why investors are #FindingGood

The April 2020 Review, from 3D Investing, the ethical funds analyst, and Good With Money, shows that ‘assets under management’ held within funds with an ethical or sustainable label in the UK has risen to £139.6 billion in the last six months, as investors sought a better home for their cash.

The rise represents further evidence of the surge in interest in investing for positive impact or with environmental, social and governance factors in mind.

It also demonstrates the superior financial performance of ethical funds over time: of the 16 ethical UK equity funds monitored, 11 have outperformed the sector average (69%). 11 out of 19 global ethical funds have outperformed the sector average (58%).

Ethical UK Corporate bond funds have fared less well over the last 12 months and this has fed through to 5-year performance figures showing only 4 out of 10 funds have outperformed the sector average (40%). The absolute differences are small, however, with the average 5-year returns only differing from the sector average by 0.16 per cent.

The Review singles out the rise in popularity of green bonds, which offer “targeted finance for environmental initiatives”.

The Review features must-read commentary on how the coronavirus crisis is affecting and might affect markets in the future from some of the UK’s top ethical and sustainable fund managers, including George Latham, managing partner at WHEB Asset Management; Luciano Diana, Senior Investment Manager, Pictet Asset Management; Graeme Baker and Deirdre Cooper, Portfolio Managers at Ninety One (formerly Investec); David Harrison at Rathbones; David Smith at Aberdeen Standard; Mike Appleby at Liontrust; Ben Constable-Maxwell at M&G Investments and George Critchley, Pennine Wealth Solutions.

10 funds have been added to the 3D ‘universe’ of ethical and sustainable funds in the six-month period to the end of April, with 75 per cent of funds in equities and 80 per cent applying an ESG or thematic approach to underlying investments. Positive impact funds represented 4.4 per cent of the total.

John Fleetwood, founder of 3D Investing, said: “In the midst of the crisis, sustainability has taken a back seat, but we argue that the crisis might actually be a catalyst for action on other existential threats.”

The review rates funds that have an ethical or sustainable approach according to how well they do what they say on the tin.

The average rating out of five stars is 2.7, with best in class five-out-of-five ratings being awarded to a handful of funds:

Five-star rated positive impact funds

Fund name
Baillie Gifford Positive Change
Civitas Social Housing
Foresight Solar
FC WHEB Sustainability
Hermes Impact Opportunity Equity
Impax Environmental Markets Fund
Investec Global Environment
John Laing Environmental Assets
Lombard Odier Climate Bond
M&G Positive Impact
Montanaro Better World
Triodos Pioneer Impact
UBAM Positive Impact Fund
Wellington Global Impact

Good With Money has published the Good Investment Review in partnership with 3D Investing every six months for three years.

Check this post for past versions of the Review.

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