Standard Life Investments, Rathbone, First State and EdenTree have been ranked as the top responsible investing funds, according to FundCalibre’s new sector ranking.
The rating service from Chelsea Financial Services has launched a responsible investing sector, to help guide investors.
At launch it has four elite-rated funds in the sector, but plans to add two more soon. The four elite-rated funds are the Rathbone Ethical Bond, EdenTree Amity UK, SLI Ethical Equity and First State Asia Pacific Sustainability funds.
“To us, responsible investing covers a number of areas including, but not exclusive to, sustainable, socially conscious, environmentally responsible or ethical businesses,” says Darius McDermott, managing director at FundCalibre.
He says the level of ‘responsbility’ and the screens used to create that ethical stance will vary among the funds.
“With the likes of the governor of the Bank of England, Mark Carney, joining the debate on the potential costs of climate change, and highlighting the impact it could have on investors, the directors of FundCalibre believe that these funds will play an increasingly important role,” says McDermott.
Morningstar and FE have also recently launched ethical rankings for funds.
The FundCalibre launch coincides with Good Money Week, which aims to promote ethical investing.
However, data from Tilney Bestinvest shows assets in ethical funds have stayed at the same level for the past decade, despite recent solid performance.
Ethical funds now account for 1.2 per cent of industry assets, the same as 10 years ago, says the financial planning firm.
“This is all the more disappointing given the relatively favourable investment climate for many ethical funds in recent years,” says Jason Hollands, managing director at Tilney Bestinvest.
He says the ethical investment industry needs to do more to appeal to the mass market and not appear as a niche product. He adds that the “extraordinary growth” of the Woodford Equity Income fund, which has three tobacco giants in its holdings. shows that many investors are not concerned with ethical investments “if the investment case stacks up”.
“For many the whole concept of ‘ethical investing’ is simply like Marmite – they either love it or hate it and such funds will never appeal to everyone,” Hollands adds.
EdenTree Amity UK: EdenTree offer even the most discerning client a justifiable investment opportunity. Having a large number of smaller companies makes the fund very different from its peers.
Rathbone Ethical Bond: This fund typifies stable management, with the manager having been there for over 10 years. It has managed to outperform regardless of its ethical constraints, illustrating that income and ethics can be combined without sacrifice.
SLI Ethical Equity: With a yield of nearly 3 per cent, this fund offers something different from other ethical funds. It is still invested in UK equities, and has the weight of Standard Life’s considerable research team behind it, plus a consistent and conscientious manager in Lesley Duncan.
First State Asia Pacific Sustainability: This fund has enjoyed excellent performance, and covers an under-utilised area of the market. The mandate may not provide the depth of ethical cover of other funds, but the pragmatic approach still provides responsible investors an outlet to the Asian markets. It is currently closed to new investments.