Sustainable investing has moved from the fringes of investing conversations to being the centrepiece of how many fund houses present themselves.
Inflows from investors have risen alongside the increased focus on the sector, with UK clients placing an average of £124m net of new money every week into funds within the sector in the first nine months of 2019.
But while flows have been strong, the total assets under management of the sustainable investment sector remains below 3 per cent of the total market in UK funds right now, and this has been largely unchanged over the past decade, as conventional equity markets have also performed well.
However, data from Square Mile Research indicates the Covid-19 crisis has sparked a significant increase in interest in sustainable funds, with four of the top five most-viewed funds on its platform being in the sustainable category.
James Glover, chief operating officer for fund research at Square Mile, says: “The first quarter of 2020 will be forever associated with the outbreak of Covid-19, with the global economy being effectively shut down in March, and seemingly all market-related news referencing the pandemic.
“Against this backdrop, the performance of responsible funds has proven to be more robust than those without a responsible element within their mandate.
“When coupled with the significant uptick in interest in responsible investing in general over recent years, it is perhaps not surprising that funds within the Academy of Funds with ‘responsible’ ratings were the most viewed over the quarter.”
In this guide to building a sustainable global equity portfolio, we look at how to avoid “greenwashing”; how to build a sustainable portfolio that is truly diversified; and how to access the emerging trends and technologies that will impact negatively on many of the companies in conventional equity portfolios, while driving returns for funds in the sustainable investment universe.
This guide is worth an indicative 60 minutes of CPD.
David Thorpe is special projects editor at FTAdviser and Financial Adviser