Clients of the Hargreaves Lansdown platform have increased their net purchases of responsible investment funds forty fold in four years, according to data from the company.
While the figure implies clients' investments have risen from a low base, it is in keeping with a surge in activity across the industry. Retail sales into responsible investment funds in the Investment Association universe reached an average of £1bn a month in 2020.
Dominic Rowles, investment analyst at Hargreaves Lansdown, says: “We believe that investing with ESG considerations in mind is simply good risk management – professional and individual investors alike should be looking to fill their portfolios with companies that are sustainable; delivering sustainable revenues, profits and – where applicable – dividends.
But those seeking to draw a regular amount from their sustainable investments may face some difficulties.
Rowles says: "Income isn’t easy to come by for responsible investors: 70 per cent of all UK equity income funds invest in tobacco companies, over 80 per cent have a holding in the oil and gas sector, 78 per cent own mining shares, and around half invest in aerospace and defence businesses.
"Funds that avoid these areas while also aiming to generate a reasonable level of income are few and far between, but they are out there. Appetite for research and analysis on ESG and responsible investing has been on the rise in recent years, and with that has come a leap in demand for responsible Investment funds. As a result of that feedback, we’ve committed to covering more responsible investment funds.”
The company has placed two responsible investment funds on its Wealth Shortlist of its favourite funds: the Trojan Ethical Income fund and the Janus Henderson UK Responsible Income fund.