When it comes to investing sustainably, sometimes meeting standard ESG criteria is not enough. Instead, investors need to look to funds that prioritise the impact of their investments.
Many of these strategies are represented in Citywire’s Ecology sector. But among these, there are a select few held in model portfolios, mixed asset and fund of fund vehicles.
The most popular of these by some margin is the Ninety One Global Environment fund. Though it was only launched in December 2019, it has attracted inflows of almost £1.8bn. It is also a top performer in terms of total return, gaining 69.9% over the last three years, placing it 5/24 in the sector.
Other perennial favourites to make the list are the Wheb Sustainability fund, which selectors like for its focus on impact, and the Impax Environmental Markets trust, which is favoured for similar reasons, as well as its track record spanning two decades.
The chart below shows how many model portfolios hold each of the five most widely owned Ecology funds, according to MPS factsheets and Morningstar data, with a toggle to also show the number of firms that own them.
The most popular Ecology funds in mixed asset, fund of fund and model portfolio vehicles
Source: Citywire
Comment
Katie Trowsdale
Abrdn head of multi-manager strategies and manager of the MyFolio sustainable fund range
We believe funds marketed as sustainable should be seeking either to invest in companies providing sustainable products and services, or those that are transitioning to support and thrive in a more ecologically friendly world. For a fund to be considered impact we look for measurability, intentionality and materiality to be covered for all holdings.
We highly rate Ninety One Global Environment, where Deirdre Cooper and Graeme Baker invest in businesses enabling the energy transition. The move to net-zero is undeniably one of the greatest challenges businesses are facing and without investment in new technologies they won’t succeed. We particularly like the focus on scopes one, two and three carbon data as well as scope four (carbon avoided).
Another fund we invest in is the MMS Sustainable fund range is Pictet Global Environmental Opportunities. The team invest in names that are aligned to the Planetary Boundaries Framework. The framework defines a safe operating space for humanity based on nine processes including but not limited to climate change, biodiversity, and ocean acidification.
We think this approach is particularly important given the need to value natural capital, avoid the depletion of natural resources and the destruction of the ecosystems that support them.