Jupiter Ecology Income Units

Our view on this Fund

Environmental issues are in the spotlight and increasing numbers of people are changing their lifestyles by saving energy, recycling and using public transport. Likewise, keen interest in ethical issues such as fairtrade, poverty, human rights, as well as climate change, has seen ethical investing become more popular.

Launched in 1988, the Jupiter Ecology Fund was one of the first ethical unit trusts in the UK. Managed by Charlie Thomas, it invests worldwide in companies demonstrating a positive commitment to the protection of the environment encompassing three broad categories: infrastructure, resource efficiency and demographics.

This year has been difficult for the fund and it has underperformed the global growth sector. The relative outperformance of the oil & gas and pharmaceuticals sectors was partially to blame for this as these areas demonstrated more resilience in volatile markets. Additionally, the fund's investments in the alternative energy sector suffered as concerns about a near-term drop in demand on the back of a slowdown in global growth, pressures on public sector spending in the West and lack of clarity surrounding legislation weighed on returns. Vestas Wind Systems was a major holding that struggled and Itron, a leader in smart grid technology (which makes electricity supply more efficient), also fared poorly.

However, there have also been some key successes. The fund's holding in marine, oil and gas services firm Hamworthy soared nearly 20% after it received at takeover approach from Finnish ship and power plant engine maker Wartsila. Elsewhere, Telvent (who make technology for infrastructure efficiency), safety equipment manufacturer Latchways, and Whole Foods Market also performed well.

Despite some short term setbacks we retain confidence in Charlie Thomas' ability and approach for the long term. Businesses offering environmental solutions are more important than ever to global economic growth. The demands of an increasing population on the world's finite resources, for example, are likely to create many challenges for providing food, water, energy and infrastructure. Companies that can provide solutions to these issues in a sustainable manner should be well placed to thrive.

For ethically-minded investors looking for a global growth fund we believe this fund is a good option for the long term and it continues to be part of our Wealth 150 list of favourite funds in each sector.

05-12-2011