For Good Money Week we’ve asked leading investment platforms and financial advisers to name their favourite ethical funds.
Do you know what you’re invested in – and do you care?
Ethical investing has been around for 15 years and often dismissed as a niche activity.
Yet this niche received £164m in investment flows in July, a huge jump on the month before, according to the Investment Association.
Correspondingly, there are now a huge variety of ethical funds with very different priorities, from battling climate change to promoting gender equality.
All of these funds have a common interest, however, which is making you money, and some have been particularly accomplished at doing so.
For Good Money Week we’ve asked some of the country’s biggest investment platforms as well as ethical investing experts to nominate their favourite ethical funds, ranked alphabetically.
Not sure what a fund is, or how to get investing? Read our guide here.
Before you read any further, please note that ethical investment is like all forms of investment in that it puts your money at risk and past performance cannot be relied upon.
Hargreaves Lansdown is an investing and pensions platform with £86bn currently under management.
Kames Ethical Equity
We think the manager of Kames Ethical Equity, Audrey Ryan is one of the best. She’s a passionate ethical investor who uses a strict approach, excluding certain areas completely. Tobacco and alcohol producers, munitions manufacturers, and companies that use animal testing won’t find a place in this particular portfolio.
The fund’s done exceptionally well since Audrey Ryan took control in January 1999. It’s grown 282.2% compared with 196.3% for the broader UK stock market, helped by exposure to medium and smaller companies.
The fund can’t invest in 69% of the UK’s largest companies because they operate in areas like oil & gas, tobacco and munitions, which leads the manager further down the cap scale. This is a higher risk approach but one which comes with higher rewards for successful active investors.
Ongoing charge: 0.78%
Performance over one year: +6.37%
Performance over five years: +47.90%
Stewart Investors Asia Pacific Leaders
David Gait and the team behind this fund use a less restrictive approach, which means technically they could invest in any sector, though they only invest in businesses which make a positive contribution to society in the countries where they’re based, engaging closely with company management to maintain or improve corporate behaviour where needed.
This fund invests in companies based across Asia - from India to Taiwan and Singapore to the Philippines. So it combines exposure to some of the fastest-growing regions of the world with a focus on companies that put environmental, social and governance issues at the heart of what they do. The team have built an exceptional track record and take a conservative approach in a dynamic, but risky area of the investment world.
Ongoing charge: 0.89%
Performance over one year: +14.53%
Performance over five years: +73.92%
Investing Ethically is a firm of chartered financial advisers specialising in ethical portfolios.
Jupiter Ecology Fund
The UK’s first green fund, launched in 2003, the Jupiter Ecology fund invests in solutions to climate change. This includes companies across the globe involved in clean energy and energy efficiency technology, which are more likely to be small and medium-sized compared to mainstream funds.
Ongoing charge: 0.78%
Performance over one year: +0.1%
Performance over five years: +55.1%
WHEB Sustainability fund
A small niche fund that has three focuses: health and population, climate change and resource efficiency. It is notable in that it openly publishes all its fund holdings on its website: usually you need to request this information from fund providers.
Ongoing charge: 1.68%
Performance over one year: +12.08%
Performance over five years: +84.57%
Legal & General
Legal & General is an investing and pensions platforms that also offers life insurance, lifetime mortgages and annuities.
Legal & General Future World Gender in Leadership UK Index Fund (GIRL Fund)
The Gender in Leadership fund, like Good Money Week, is about saving and investing purposefully without compromising returns.
Our GIRL fund is based on the principle that responsibly run, more diverse companies won’t just benefit society – they could benefit investors too. This is because we believe the best business decisions (and ultimately financial performance) are made when there’s a diverse group of people debating and challenging them.
The fund invests more in gender diverse companies because of this and seeks to raise gender diversity standards across UK companies on the whole. It’s a way of doing more with your money – more for you and the world around you.
Ongoing charge: 0.50%
Performance N/A as fund launched May 2018
Vanguard is an investment platform which is owned by its constituent funds.
Vanguard SRI Global Stock Fund
The Vanguard SRI Global Stock Fund seeks to provide long-term growth by matching the performance of the FTSE Developed Index.
It achieves this by screening out companies that do not meet the UN Global Compact standards on environmental protections, labour standards, human rights, and controversial weapons. It also excludes tobacco companies.
The fund is designed to be a core holding for investors who want an SRI exposure. As a tracker, its goal is to match the index as closely as possible and, we are able to manage this at a very low cost of 0.35% a year, meaning investors keep more of their returns.
The Vanguard SRI European Stock fund follows the same process as the Global fund but only holds European companies. The cost of the fund is 0.30% p.a.
Ongoing charge: 0.35%
Performance over one year: +14.51%
Performance over five years: +86.74%
Willis Owen is an investment platform with £1bn of funds under management.
Kames Ethical Cautious Managed
This fund, managed by experienced ethical investors Audrey Ryan and Iain Buckle invests in UK shares and bonds.
It applies a strict ethical filter to its investment process which excludes mining and energy stocks, tobacco and banks with investment banking operations. The fund also excludes government gilts on the bond side which result in a very different fund to many peers.
The fund tends to have a bias towards mid and smaller companies as well as favouring cyclical stocks. The team focus on a combination of stock selection and wider economic analysis to generate ideas and construct a portfolio of investments.
Ongoing charge: 0.79%
Performance over one year: +2.68%
Performance over five years: +32.71%
Stewart Investors Worldwide Sustainability fund
The fund invests in global equities and would suit as a core invest or someone seeking to build a sustainably focused portfolio. The investment process will take account of sustainability themes and issues and requires positive engagement with companies in respect of these. The manager David Gait focuses on stock selection and conducts thorough fundamental analysis with a heavy focus on the sustainability of earnings and business models. There is a preference for high-calibre management in franchise companies backed by healthy balance sheets. The price they pay for a business is important, but a company’s quality aspects are the priority.
Ongoing charge: 1.66%
Performance over one year: +8.76%
Performance over five years: +73.63%
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