BLOG: How to invest – and be kind to our planet
It’s a question that keeps investors with a conscience awake at night: Can you really make decent returns and still do your bit to help safeguard the planet’s future?
Thankfully the answer is yes. In fact, an increasing number of investment funds are managing to make money in ethical ways, and more and more investors are choosing to invest in them.
Latest figures from the Investment Association reveal funds under management with responsible criteria soared £34bn to £89bn in 2021 – that’s a whopping increase of 62%.
Separate research by Fidelity found 46% of UK adults wanted their cash to make a positive change, while 30% said events of the last year had encouraged them to invest or save more sustainably.
Good Money Week
This enthusiasm has been boosted by events such as Good Money Week that runs from 3 to 7 October and is organised by the UK Sustainable Investment and Finance Association.
The aim of this dedicated week – which has been running since 2005 – is to help the public make better choices with their banking, pensions, and investments.
A priority for UKSIF is conveying the message that choosing ethical providers means your money won’t go to companies funding problems such as modern slavery and the climate crisis.
Of course, responsible investing means different things to different people. For example, some investment funds prioritise companies that treat their shareholders well.
Others refuse to invest in certain sectors or companies. It all depends on the objective of a particular fund and the manager at the helm.
That’s why I thought it would be worth highlighting some of our favourite responsible and sustainable funds and what we like about them.
First up is EdenTree. This company is a pioneer in responsible investing and runs a number of different portfolios, all with a sustainable slant. Its EdenTree Responsible and Sustainable UK Equity fund, for example, invests in stocks that make positive contributions to society and the environment.
Its largest holdings include industry-leading pharmaceutical names such as AstraZeneca, which played such a prominent role in getting people vaccinated from Covid-19.
AstraZeneca also commands a prominent position in the Janus Henderson UK Responsible Income fund, which avoids companies it believes have a negative impact on a sustainable global economy.
Looking further afield
Of course, it’s not just UK-focused funds that are worth considering by investors searching for managers taking a more responsible approach.
As its name suggests, the Liontrust Sustainable Future Global Growth fund has a more international focus, and the managers invest in three mega themes for a cleaner, safer and healthier world.
Then there’s Ninety One Global Environment – a fund that only invests in companies that are contributing to the decarbonisation of the world economy – and CT Responsible Global Equity, that has engagement at the heart of its process and works proactively with companies for better outcomes.
Responsible investing is also not confined to equities – bond investors can get involved too, with the likes of Rathbone Ethical Bond fund, or mix both asset classes in Aegon Ethical Cautious Managed.
Juliet Schooling Latter is research director at FundCalibre