Victoria Hasler, head of fund research, Hargreaves Lansdown looks at 4 funds to consider for clients looking to invest responsibly and who prefer passive strategies.
A passive fund may sound like an odd choice for responsible investing, but there are passive managers out there who aim to replicate the returns of main markets whilst incorporating environmental, social and governance considerations.
The Legal & General Future World ESG Tilted and Optimised Developed Index Fund invests across global equity markets, tracking the Solactive L&G ESG Developed Markets index, but avoids areas like tobacco, coal and weapons.
Staying closer to home, the Janus Henderson UK Responsible Income Fund avoids companies that they believe could cause significant harm to people, the environment or animals. The fund benefits from an experienced manager at the helm and focuses on companies that generate plenty of cash flow and are attractively valued.
If you are looking to invest directly in an area that will positively impact the world, then you could consider infrastructure. The government’s commitment is to move away from oil and gas and towards renewable energy generation. This is needed for the UK to achieve energy independence as well as to hit our net zero commitments.
Increased spending on, and government support for, renewable infrastructure should support funds which invest in assets such as wind farms, solar parks and battery storage facilities. These are physical assets which are illiquid and so the best way for retail investors to access them is generally through investment trusts such as Greencoat UK Wind. This is an investment trust which invests in operating onshore and offshore UK wind farms that are currently producing income.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment
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