It’s not hard to set up a new fund and buy the top 50 sustainable stocks according to an external data source. However, we prefer to take a more informed approach based on a rigorous investment process that has delivered strong returns across a variety of market conditions, supported by in-house fundamental research, risk management and high standards of reporting.
Within this, we weight equally a stock’s sustainable score against its financial metrics – stocks with compelling sustainable credentials can be terrible investments. Equally, good sustainable companies that we identify early through diligent research can be driven up by weight of money until it’s right to take profits. Selling at the right time is important in delivering good investment returns.
Choice is generally considered a good thing. In asset management, as well as reducing the risk of bubbles, it also helps advisers to better match their clients’ values and principles. Educating and empowering investors, while maintaining a diversity of investment approaches, would be a credible alternative.
The value of investments and the income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested.
Find out more about our range of sustainable funds at rlam.co.uk/sustainable
Mike Fox is Head of Sustainable Investments at Royal London Asset Management.
For professional clients only, not suitable for retail clients. This is a financial promotion and is not investment advice.
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and are not investment advice.
Issued in May 2021 by Royal London Asset Management Limited, 55 Gracechurch Street, London, EC3V 0RL. Authorised and regulated by the Financial Conduct Authority, firm reference number 141665. A subsidiary of The Royal London Mutual Insurance Society Limited.