BLOG: Seven fund ideas to invest with a clear conscience this ISA season
A colleague of mine was lucky enough to go skiing last week. To offset some of the guilt of polluting the atmosphere by travelling by plane, she sourced the family’s skiwear second hand on Vinted.
But looking out of the plane window, the harsh reality of climate change was laid as bare as the snow-less mountains below.
Investing with a clear conscience means making investment decisions that align with our personal values and beliefs. We need to consider not only financial returns but also social and environmental impacts too.
One way to do this is to choose investments that promote sustainable and responsible practices, such as renewable energy or ethical businesses. Another approach is to avoid investing in industries that conflict with your values, such as fossil fuels or weapons. A third way is to do both.
Here are seven investment funds, each doing something a little different, but each also support companies that are committed to positive social and environmental outcomes and helping to drive positive change in the business world.
1) EdenTree Responsible & Sustainable UK Equity
As pioneers of responsible investing, EdenTree offers even the most discerning client a justifiable investment opportunity. EdenTree Responsible & Sustainable UK Equity can invest in UK companies of any size but has a bias towards medium and smaller-sized firms and the manager is totally committed to investing responsibly. The long-term track record of the fund’s performance over several decades has proven that ethical investing and good returns can go hand in hand.
2) Janus Henderson UK Responsible Income
Investors wanting to tap into the UK but also get an income might want to consider this fund which has a well-defined approach to investing responsibly, combined with a tried and tested equity income investment process. Manager Andrew Jones has a common-sense approach to this fund, allowing screens to filter the universe, followed by in-depth analysis on the remaining opportunities. He won’t chase yield and will look for a balance of growth as well as an attractive income.
3) Rathbone Greenbank Global Sustainability
This global equity fund can invest in companies of any size. Manager David Harrison focuses on selecting stocks with strong cash generation but will actively avoid businesses involved in unethical or unsustainable practices. The exclusion criteria included are alcohol, animal testing, armaments, extraction of fossil fuels, gambling, nuclear power, pornography, tobacco and poor employment, environment and/or human rights practices. Each holding will also have to have at least one positive environmental, social or governance attribute.
4) LF Montanaro Better World
LF Montanaro Better World is a global equities fund looking for medium and small-sized businesses whose products or services are making a positive impact on the world. To identify these companies, the team has six impact ‘themes’: environmental protection, the green economy, healthcare, innovative technologies, nutrition, and well-being. And, in order to stay true to these themes, the team will also exclude companies that are causing harm, such as those involved in tobacco, weapons and fossil fuels extraction.
5) Ninety One Global Environment
Ninety One Global Environment is a global equities fund that includes emerging markets, but the managers will only invest in companies that are contributing to the decarbonisation of the world economy – an approach which is genuinely unique. The proprietary screen that is used to build the investable universe is impressively comprehensive and dynamic to ensure the futureproofing of the strategy in the event of considerable technological enhancement. It means that the fund is set to benefit from the massive tailwind of the some $2.4 trillion of annual spend required to meet global temperature goals.
6) VT Gravis Clean Energy Income
Renewable energy is undergoing mass adoption – a trend which this fund taps into directly. It aims to capture a blended portfolio of the best listed vehicles across the developed market and give an anchor to portfolios through defensiveness and steady income. Gravis is an expert in this region and has a long-standing history of investing in this space, giving investors confidence in the long-term ability of the fund to deliver attractive, compound returns.
7) Liontrust Sustainable Future Monthly Income Bond
As the name suggests, Liontrust Sustainable Future Monthly Income Bond aims to produce a monthly income with some capital growth. It does this by investing mainly in corporate bonds and some Government bonds. The managers assess the extent to which a company’s core business helps or harms society and/or the environment and whether a company has appropriate structures, policies, and practices in place for managing its environmental, social and governance risks and impacts.
Juliet Schooling Latter is research director at FundCalibre