This Earth Day, the latest Good Investment Review reveals the top-rated responsible investment funds – those that are making the highest impact on people and/or the planet as well as aiming for profit.
The April 2024 review also reports that responsible funds have performed as well as their traditional peers this year so far, despite turbulent global markets.
It says: “Responsible Investment funds have shown their power and potential by achieving comparable returns while investing in sustainable and/or social solutions.”
Top-rated positive impact funds at a glance
Comparing the financial performance of responsible funds against their traditional peers in the year to date as well as over the last five years, the review says that a rocky year on the stock markets in 2022 for responsible funds in particular can now be viewed as “a hiccup.”
In the first quarter of 2024, the ethical Global Equity funds monitored in the review have returned an average of 7.74 per cent compared with 7.69 per cent for all funds in the sector.
Meanwhile, the ethical UK All Companies funds monitored have brought average returns of 2.39 per cent compared with 2.92 per cent for the sector. The Sterling Corporate Bond funds have brought 0.51 per cent returns compared with 0.44 per cent for the sector.
Jake Moeller, Associate Director of Responsible Investment at Square Mile Research, said: “After a challenging year in 2022, many Responsible Investment (RI) funds bounced back in 2023 as soon as investors noticed that assets had been oversold when inflation and interest rates soared.
“Moreover, despite temporary higher funding costs for many companies, regulation in the UK has strengthened the sustainable agenda, showing the market that RI only had a hiccup.”
The review from Good With Money, Square Mile Research and The Big Exchange explores the rapid growth of responsible investing and the positive influence that increased regulation – especially new rules to tackle greenwashing – is having on the industry.
Square Mile Research rates responsible funds against the three principles of its “3D Framework.” These are:
- Do Good – Investment in companies offering solutions to global, social and environmental challenges and evidence of impact
- Avoid Harm – Avoidance of investment in companies making a significant, negative contribution to society and the environment and those exposed to controversies
- Lead Change – Advocacy and engagement with investee companies both individually and through cooperation with other investors and change activists to encourage best practice and inform opinion
In the latest review, 19 responsible investment funds have achieved a ‘Gold’ rating. See the full list here.
The review includes essential commentary from key sponsors, including:
The Big Exchange – Sustainable funds, sustainable investment platform?
Good With Money – The importance of staying invested for the planet
abrdn – Impact as a lens for returns generation
Aegon Asset Management – Sustainable investing: why cycles don’t mean structural shifts
Baillie Gifford – From countryside to construction: addressing climate challenges with AI
Guiness Global Investors – Investing in the energy transition
Liontrust – Building better cities for growth and sustainability
M&G Investments – The role of engagements and investor additionally in impact investing
Rathbones – Power to the people
Schroders – In practice: How your investments can change companies for the better
Wellington Management – The value in valuing employees
