5 Funds to make
your ISA greener
Investing doesn’t necessarily have to be a choice between profits
and ethics. These five funds aim to excel at both.
In the past, aligning your personal values with your investments meant having to compromise on how much growth you could see on your money. However, as issues involved with conservation and climate change have moved to the forefront of global consciousness, investing in companies that seek to improve the world has become increasingly popular, and now can even add an attractive yield to a portfolio.
Using the UN’s Sustainable Development Goals (SDGs) as a blueprint, there are now a variety of funds that seek to improve the state of the world, whether that’s through improving efficiency of alternative energies to replace fossil fuels, or producing clean water and improving water infrastructure. Below are five funds drawn from these ideas that could grow your investments whilst also supporting something you believe in.
VT Gravis Clean Energy Income
Coal and oil still account for over 60% of total global energy supply and both are finite resources. Therefore, there’s a large and growing market for companies involved in making energy generation and supply cleaner and more efficient.
The team at Gravis have considerable expertise in this area investing over £1bn in renewable energy projects.
This funds aims to deliver a regular income of 4.5% per annum as well as preserving investor’s capital with the potential for growth. The fund invests in renewable energy such as wind, solar and hydro via companies owning renewable energy assets or operations directly linked to the funding, construction, generation and supply of renewable energy. It also invests in greener energy - companies that derive a significant part of their revenue from increasing the efficiency of or reducing pollution from generating and supplying energy or using energy.
JLEN Environmental Assets
JLEN have been recognised for their contributions to a greener, more sustainable economy by being awarded the new Green Economy Mark. This is given out by the London Stock Exchange and identifies companies and funds generating over 50% of total annual revenues from products and services contributing to the global green economy.
This renewables infrastructure Investment Trust differs from many in the Renewable Energy sector, focussing on less mainstream areas such as hydro-electric power, biomass combustion and batteries, whereas many of the peer group are focussed on solar and wind energy. The managers believe these are areas where pricing pressure from other investors is less intense.
The trust aims to provide investors with a sustainable quarterly dividend and to preserve the capital value of its portfolio. Investors should bear in mind that investing in niche assets can bring an increased level of risk, and therefore should consider holding it as part of a well-diversified portfolio.
iShares Global Clean Energy ETF
BlackRock have identified Climate Change and Resource Scarcity as one of the 5 megatrends which will be long-term forces shaping our future. It is estimated that 50% of the world’s energy is to come from solar and wind by 2050. This offers considerable opportunity for clean energy related business.
This fund is a passive index strategy seeking to track the performance of the S&P Global Clean Energy Index. This index identifies companies based on their membership to the two following clusters: Clean Energy Producers and Clean Energy Technology & Equipment. The fund provides investors with exposure to 30 of the largest global companies involved in the clean energy sector.
The fund holds an MSCI ESG rating of AA, ranking it as a leader in managing the most significant Environmental, Social and Governance (ESG) risks and opportunities
With increasing water stress being witnessed on a global scale, it is estimated that over $22trillion is needed in water infrastructure investment from 2005-2030. This clearly creates investment opportunities for both companies and investors.
Pictet Water is one of Pictet’s original thematic equity funds and has been running for almost 20 years. It aims to invest in companies providing water supply or processing services, or water technology and environmental services. The water theme is thought to be underpinned by five megatrends: Focus on Health, Commercialisation, Economic Growth, Sustainability and Demographic Development. The five investment managers are supported by a highly experienced team and also a water advisory board which consists of recognised experts from NGOs, academia and the private sector. Investors should note the fund has a relatively high exposure to North America, meaning it is more sensitive to local economic, market, political or regulatory events.
Janus Henderson Global Sustainable Equity
The team at Janus Henderson have identified four environmental and social megatrends which they believe are pressuring the sustainability of the economy. These are; population growth, aging population, resource constraints and climate change.
This fund contributes strongly to two of the United Nations Sustainable Development Goals; ‘Clean Water and Sanitation’ and ‘Life below water’. It is believed that water is under pressure from both the supply side (insufficient fresh water and climate change) and the demand side (increasing use in agriculture, industry and residential areas).The significant amount of waste we produce has a number of negative impacts on the environment. The fund addresses these issues by giving exposure to companies involved in recycling and circular economy, waste management and environmental engineering and infrastructure.
The fund’s approach is also explicitly low carbon, with a footprint around 85% lower than the MSCI World Index.
Start investing in the future
You can also make an early start on your tax-efficient ISA allowance with a Self-Select ISA. Invest up to £20,000 this tax year in a range of responsible funds, with all your profits free from income and Capital Gains
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.
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