‘Wrong to steer clients away from green investing’

The head of sustainable and responsible investment for Alliance Trust Investments said he knew advisers who steered clients away from ethical investments, even when after they had expressed an interest in them during the initial factfind.

Mr Michaelis argued said this could be highly counterproductive as many clients were prepared to go the extra mile to find advice on ethical and green investment in “progressive companies”.

His comments came during National Ethical Investment Week and before the socially responsible investment team at Alliance Trust embarked on a series of advisory roadshows in 30 towns and cities.

Article continues after advert

Mr Michaelis said: “Anecdotally I hear that advisers get to the compulsory question on whether their clients have ethical concerns and they hope the response will be ‘no’.

“Many advisers think researching this area just makes their job harder. Yet people will happily travel hours to advisers who specialise in ethical and green funds, and those clients will be loyal and much more prepared to pay for advice.”

Mr Michaelis said it was a particularly important consideration in the post-RDR world as advisers need to add value to their proposition. He argued that ethical investing had come into its own since the 2008 financial crash as consumers demanded more transparency.

He added: “If you look at returns on ethical funds in the past year, there is no evidence that there is a consistent underperformance. In fact nine out of 13 UK ethical funds have been outperforming the index comfortably in a three-year period.”

The Association of Investment Companies reported a 29 per cent rise in share price total returns for its environmental sector in the past year, compared to an industry average of 16 per cent. Three new investment trusts have been launched in 2013.

Helen Tandy, director of ethical investment advice specialist Gaeia in Manchester, said: “We encourage other advisers to ask the question. If the answer is no, that’s fine but if any advisers don’t ask clients, we end up gaining clients that specifically seek us out. We may be based in Manchester but clients are coming to us from all over the UK.”

Steve Kenny, head of retail sales for ethical fund manager Kames Capital, agreed it was a “long-standing myth” that green investing meant a sacrifice on returns, adding: “These funds really do prove ethical investors can have their cake and eat it.”

The Investment Management Association UK All companies sector shows that the Kames Ethical Equity Fund, managed by Audrey Ryan, has been in the first quartile for three and 10 years, and in the second quartile for one and five years.

The Kames Ethical Cautious Managed Fund, co-managed by Ms Ryan and Iain Buckle, was also ranked in the first quartile of the IMA Mixed Investments 20-60 per cent sector for one, three and five years.

Renewable Infrastructure Company - launched 29 July
Bluefield Solar Income Fund - launched 12 July
Greencoat UK Wind - launched 27 March