Sustainable investment funds and ESG funds are big news! More of us than ever want to make sure our investments are ethical and that we support companies that are doing good in the world. We want to avoid companies that damage the environment and don’t improve people’s quality of life.
Here, I take a look at the five most popular sustainable investment funds, according to pension company Interactive Investor. These funds are all part of Interactive Investor’s ethical long list and were the most popular funds between 16 April 2021 and 16 February 2022. I examine where these funds choose to invest and whether they have decent historic performance. Is it possible to invest in sustainable funds or ESG funds and still enjoy great investment performance?
5 most-bought sustainable investment funds
1. Baillie Gifford Positive Change (Investment fund)
This popular sustainable investment fund is often included in best buy lists. The investment managers pick companies based on four criteria. For the fund managers to invest, a company has to “deliver positive change in one of four areas: Social Inclusion and Education, Environment and Resource Needs, Healthcare and Quality of Life.”
Some of the fund’s largest holdings include Dutch tech company AMSL, the pharmaceuticals firm Moderna and electric car company Tesla. The fund has performed very well, growing at 90.2% over the past three years and 187.1% over the past five years.
2. iShares Global Clean Energy (ETF)
This sustainable investment fund tracks the S&P Global Clean Energy Index. It invests in 30 companies involved in “clean energy-related businesses, comprising a diversified mix of clean energy production and clean energy equipment and technology companies.”
The price of this fund has grown 164.6% in the past three years and 191.2% in the past five years.
The fund is an exchange-traded fund (ETF), which means that shares in the fund are traded on the stock exchange. Most ETFs are passive funds, so they invest in an underlying share index instead of cherry-picking the companies it invests in.
3. Greencoat UK Wind PLC (investment trust)
Greencoat Capital LLP is a specialist manager dedicated to investing in the renewable energy infrastructure sector.
The fund has increased in value by 19.1% in the past three years and 53.2% in the past five years.
This fund is an investment trust, which means that shares in the fund are traded on the stock exchange. Investment trusts are closed-ended (they don’t issue more shares), so you can only buy shares if someone else is selling.
4. Impax Environmental Markets (investment trust)
This sustainable investment fund invests in mainly quoted companies that work in “alternative energy and energy efficiency, water treatment and pollution control, and waste technology and resource management.”
The fund has enjoyed impressive price growth of 60.0% in the past three years and 105.3% in the past five years.
This fund is also an investment trust.
5. Gore Street Energy Storage Plc (investment trust)
This sustainable investment fund invests in a portfolio of energy storage projects, mainly located in the UK. “The Company seeks to provide investors with a sustainable and attractive dividend.” It does this by “investing in a diversified portfolio of utility-scale energy storage projects primarily located in the UK.”
The fund has increased in value by 15.0% in the past three years and 45.6% in the past five years.
This fund is also an investment trust.
Where to invest in sustainable investment funds
You can invest in sustainable investment funds by using a share dealing account, a stocks and shares ISA or a pension fund. Check with your provider as some offer more investment options than others.
Many investment companies are starting to provide more information, so you can select funds based on your own criteria. Some providers allow you to select sustainable investment funds, which can help you to narrow down your selection.
If you’re ready to invest, then a great way to start is to check out our list of top-rated stocks and shares ISAs.
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About the author
Alice is a Suffolk-based personal finance writer specialising in pensions, tax, investment and small businesses. She is a qualified Chartered Accountant and has previously worked for KPMG London and Tesco Plc.
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