Responsible Investment

A UK-focused fund with a focus on higher-risk small and medium-sized companies. It combines 'stewardship', ‘ESG integration' and 'exclusions'. It doesn’t invest in areas like tobacco, arms and gambling.

The fund's investment universe is filtered for 'sin stocks' by Aegon's ESG Research Team. This negative screening process is kept separate from manager Audrey Ryan and the rest of her team, leaving them free to focus on stock selection and portfolio construction. ESG is also key to the fund's investment process. Ryan and her team aim to identify and understand the main environmental, social and governance risks of each company, industry and sector they invest in. They believe companies that lead the way in governance and sustainability could outperform over the long run.

Audrey Ryan has been at the helm of this fund for more than two decades and is a knowledgeable and passionate ethical investor. This gives us confidence in the fund’s long-term prospects, although past performance is not a guide to the future.

This fund holds shares in Hargreaves Lansdown plc.

The fund aims to dampen volatility by providing some shelter during market wobbles, while also delivering some long-term growth in a sustainable way. It combines 'stewardship', 'ESG integration' and 'exclusions'.

This fund launched in April 2018 and is managed by BNY Mellon's Real Return team. They invest in a variety of assets, such as shares, bonds, commodities and cash, and adjust their exposure to each depending on their economic outlook. They also have the flexibility to invest in emerging markets, high-yield bonds and derivatives which, if used, adds risk.

The fund's sustainable ‘red lines' mean companies that violate the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption) and those incompatible with the aim of limiting global warming to 2°C are not considered. It also won't invest in any company that makes more than 10% of its revenues from tobacco, gambling, weapons and several other controversial areas.

The team's built up a good track record over a long period of time with another fund that's managed similarly to this one, albeit with less emphasis on sustainability. Their experience and time-tested investment process give us confidence they can deliver good returns in a responsible way with this fund, although there are no guarantees. The fund will perform differently to the team's other ventures.

The Fidelity Sustainable Moneybuilder Income fund aims to provide a relatively steady income and a small amount of growth, without taking excessive risks, by investing in bonds. We think it combines 'stewardship', 'ESG integration', 'exclusions' and a ‘sustainability focus’.

Most bond managers analyse the bigger economic picture and Kristian Atkinson and Shamil Pankhania are no different. But we also think a strength of the team is their skill at analysing bond-issuing companies. It helps them determine which are the most attractively priced bonds and should be included in the fund. The managers can invest overseas but you should expect the fund to retain a strong UK bias.

The duo considers ESG factors when researching individual companies and bonds. They think these factors have the potential to affect the long-term value of the investment and believe high standards of corporate responsibility make good business sense. At least 70% of the fund invests in bonds issued by companies with sustainable characteristics, as defined by both Fidelity’s proprietary Sustainability Ratings and external ESG scores. The remainder invests in issuers demonstrating improving sustainable characteristics, and the managers will engage with these companies to agree improvement milestones and timescales. The fund excludes companies involved in controversial areas, such as weapons, tobacco, thermal coal and gambling. The managers also avoid companies violating the UN Global Compact – a UN pact on human rights, labour, the environment and anti-corruption.

The managers have the flexibility to invest in high yield and unrated bonds, as well as derivatives, which, if used, adds risk.

Long-term growth is the main aim of this fund, and the managers try to achieve more stable returns compared with others in the Asia sector. This fund combines a 'stewardship' and an 'ESG integrated' approach.

Martin Lau and his team have the freedom to invest across Asia, including higher-risk emerging markets. They look for companies with strong cash flows, an ability to keep costs under control and high standards of company management. The team’s investment philosophy is founded on stewardship. When they make an investment, they see themselves as part owners of the business. They engage with companies to make sure they are run in a way that’ll benefit all shareholders, and also consider environmental, labour and other governance issues.

We think this fund is a great way to access the growth potential of Asian stock markets and it could do well over the long run. We hold Martin Lau in high regard and his long-term track record is exceptional, although there’s no guarantee this will continue.

This fund aims to provide a good level of income alongside capital growth over the long term. It combines ‘stewardship’, ‘ESG integration’ and ‘exclusions’. It mainly invests in the UK, but the manager also invests up to 20% overseas.

Andrew Jones has been at the helm of this fund since January 2012 and has over two decades of experience managing UK equity income funds. The fund doesn’t invest in areas some investors consider unethical, such as alcohol, armaments, gambling, non-medical animal testing, nuclear power, tobacco and fossil fuel power generation (although companies generating power from natural gas may be allowed if the company's strategy includes a clear plan to transition to renewable energy power generation).

All investments must also be compliant with the UN Global Compact Principles (a United Nations pact on human rights, labour, the environment and anti-corruption), and before adding any company to the fund, the manager carries out detailed ESG analysis, engaging with company managers if he feels there’s room for improvement.

Please note the manager has the flexibility to invest in smaller companies, which adds risk. The fund also takes charges from capital, which could boost the income, but reduces the potential for capital growth.

This fund aims to track the performance of the Solactive L&G ESG Developed Markets Index. It combines 'stewardship', 'ESG integration' and 'exclusions'.

The Solactive L&G ESG Developed Markets Index is made up of over 1,400 companies based across the globe, which is currently focused towards sectors such as technology, pharmaceuticals and financials. The index increases the weighting in companies that score well on a variety of ESG criteria – from the level of carbon emissions generated, to the number of women on the board and the quality of disclosure on executive pay. It also reduces the allocation to companies that score poorly on these measures.

The fund won't invest in persistent violators of the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption) or companies involved in tobacco, controversial weapons (such as cluster munitions, anti-personnel mines and chemical and biological weapons) or civilian firearms. The fund also avoids companies that make more than a fifth of their revenues from thermal coal and oil sands. The fund is also managed to achieve at least a 7% reduction in carbon emissions per year until 2050.

The fund’s tracked its index well since launch in April 2019. Given Legal & General’s size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in future, though there are no guarantees. Investors should note the fund invests in smaller companies, which adds risk.

This fund aims to replicate the performance of the Solactive L&G Enhanced ESG Emerging Markets Index. It combines 'stewardship', 'ESG integration' and 'exclusions'.

This fund provides broad exposure to emerging markets by tracking the Solactive L&G Enhanced ESG Emerging Markets Index. The index is made up of around 1,500 companies spread across a range of countries including Taiwan, India and China. These markets are higher risk as they're at an earlier stage of development, so this fund should only be considered for a portfolio with a longer investment outlook that can accept periods of high volatility. The fund also invests in smaller companies, which adds further risk.

The index increases investments in companies that score well on a variety of ESG criteria – from the level of carbon emissions generated, to the number of women on the board and the quality of disclosure on executive pay. It also reduces exposure to companies that score poorly on these measures.

The fund won't invest in persistent violators of the UN Global Compact Principles or those involved in controversial weapons, tobacco or civilian firearms. Companies that generate more than a fifth of their revenues from thermal coal or oil sands are also excluded.

On top of this, the fund adopts a decarbonisation pathway. This means it aims to reduce emissions by 7% per year until 2050.

The fund’s tracked its index closely since launch April 2022, although this is a short period of time over which to consider performance. The team’s track record of successfully managing other tracker funds gives us confidence this fund will continue to track its index tightly, although there are no guarantees.

This fund aims to perform broadly in line with the UK stock market by tracking the Solactive L&G Enhanced ESG UK Index. It combines ‘stewardship’, ‘ESG integration’ and ‘exclusions’.

The Legal & General Future World ESG UK Index provides broad exposure to the UK stock market, while being mindful of ESG issues. Its benchmark, the Solactive L&G Enhanced ESG UK Index, is made up of around 300 companies spread across the whole of the UK market.

The index increases investments in companies that score well on a variety of ESG criteria – from the level of carbon emissions generated, to the number of women on the board and the quality of disclosure on executive pay. It also reduces exposure to companies that score poorly on these measures.

It avoids investing in companies involved in controversial weapons, and those with significant involvement in tobacco, civilian firearms, thermal coal and oil sands. It also avoids persistent violators of the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption).

On top of this, the fund adopts a decarbonisation pathway. This means it aims to reduce emissions by 7% per year until 2050.

The fund’s tracked its index closely since launch April 2019, and we expect this to continue given the quality and scale of the investment team, although there are no guarantees. Investors should note the fund invests in smaller companies, which adds risk.

This fund aims to deliver a combination of income and capital growth over the long term by investing mostly in sterling-denominated, investment grade corporate bonds. It combines ‘stewardship’, ‘ESG integration’, ‘exclusions’ and a ‘sustainability focus’.

The fund’s managed by a team of three: Kenny Watson, Aitken Ross and Jack Willis. They aim to identify bonds issued by high-quality companies whose core products or services make a positive contribution to society or the environment. The fund also employs negative screening. This means it won’t invest in any company that makes more than 5% of its revenues from alcohol, animal testing services, coal, oil & gas, gambling, intensive meat and fish farming, nuclear, ozone depleting substances, pornography, tobacco or weapons systems.

The team began managing the fund in August 2012 and since then it’s done well, outperforming peers in the IA £ Corporate Bond sector. Remember, past performance is not a guide to the future.

The managers have the flexibility to invest in derivatives and emerging markets which, if used, adds risk. The fund takes charges from capital, which can increase the income on offer but reduces the potential for capital growth.

This fund aims to grow investors’ money by investing in companies that make a positive contribution to society, the environment or both. It combines ‘stewardship’, ‘ESG integration’, ‘exclusions’ and ‘impact’.

The first step in identifying companies capable of making a positive impact on the environment and society is excluding those whose activities result in significant negative impacts, such as companies that produce controversial weapons, tobacco, oil & gas and coal. Violators of the UN Global Compact principles (a UN pact on human rights, labour, the environment and anti-corruption) are also excluded.

Manager Matthew Evans then assesses companies across three pillars – financial strength and sustainability, the impact of its operations and the impacts of its products or services. The manager takes this approach because he believes the impacts that companies have, both positive and negative, will become increasingly important in the way they’re valued in the future.

Evans is a committed and passionate sustainable investor and we think he has the experience and resources at Ninety One to do a good job for investors over the long term. However investors should note the manager’s flexibility to invest in smaller companies and derivatives adds risk.

This fund focuses on the Indian Subcontinent, with the aim to provide long-term investment growth. It mainly invests in Indian companies, though it can also invest in Pakistan, Sri Lanka and Bangladesh. It combines 'stewardship', 'ESG integration' and 'sustainability focus'.

Sashi Reddy and David Gait invest in quality companies they believe can deliver sustainable and predictable growth over the long term. They like cash-generative businesses, which are in good financial health and could withstand periods of economic volatility. Stewardship and sustainability are a core part of the investment strategy. The duo focus on companies they believe could benefit from and contribute to the sustainable development of the countries they’re based in. They also avoid controversial areas like alcohol, tobacco and gambling.

The managers’ longer-term record on this fund is impressive, and it’s significantly outperformed the broader Indian stock market over the long term. Our analysis shows Reddy and Gait have added value through good stock-picking, regardless of the size of the company or what sector it’s in. As always, past performance isn’t a guide to future returns.

Investing in emerging markets is higher-risk, and we think this fund should make up just a small portion of a well-diversified portfolio. The fund also invests in smaller companies, which increases risk further.

This fund aims to provide a rising income alongside capital growth over the long term – a ‘total return’ approach. The manager also incorporates ‘stewardship’, ‘ESG integration’ and ‘exclusions’. He focuses on the UK stock market but has flexibility to invest up to 30% overseas.

Hugo Ure has managed the Troy Trojan Ethical Income fund since launch in January 2016. Ure has a shorter analysable track record than some other fund managers on the Wealth Shortlist, but we’re encouraged that the Trojan Ethical Income fund uses the same investment process as the Troy Trojan Income fund. Both funds also leverage the skills and experience of the wider Equity Income team.

The manager won’t invest in companies deemed unethical, such as those with significant involvement in armaments, tobacco, pornography, fossil fuels, alcohol, gambling and high interest lending. He also conducts ESG analysis on each company to achieve a deeper understanding of the risks. Where he feels improvements can be made, he’ll engage with the company. The focus is on large and medium-sized companies, although the manager does have the flexibility to invest in higher-risk smaller companies too. The fund takes charges from capital, which could boost the income, but reduces the potential for capital growth. He can also invest in derivatives, which adds further risk.

This fund invests in companies across the globe that help to address long-term demographic, environmental and resource challenges. They must also have strong prospects in their own right and be available at an attractive price. It combines 'stewardship', 'ESG integration' and 'impact'.

The team behind this fund focus on nine sustainable investment themes, which range from resource efficiency and sustainable transport to education and wellbeing.

The fund hasn’t performed as well as the broader global stock market over the past few years. Our analysis suggests a focus on higher-risk small and medium-sized companies, and the fund’s sector positioning, should have helped performance, but the managers invested in companies in these areas of the market that haven't done so well.

The managers have the flexibility to invest in emerging markets which are higher-risk than developed ones.

The fund invests globally in companies that have a positive emphasis on society, the environment and health. It combines 'stewardship' with 'ESG integration' and a ‘sustainability focus’.

Nick Edgerton’s sustainable approach means he doesn’t invest in companies with significant exposure to harmful products and services, or those that fail to meet their environmental stewardship and human rights responsibilities. That means, like other Stewart Investors funds, the fund doesn’t invest in areas like alcohol, tobacco and gambling. Investors should note the fund has some exposure to emerging markets, which adds risk.

The manager benefits from the support of a team we have long held in high regard. We believe the fund could deliver reasonable returns over the long term, although there are no guarantees.