Good Money Week: Three funds for a sustainable world

‘Sustainable investing makes a lot of corporate sense’


ESG Clarity

Willis Owen’s Adrian Lowcock has shared three fund picks offering investors exposure to the transition to a more sustainable economy and planet.

Kicking off Good Money Week, an annual campaign to promote sustainable, responsible and ethical investing, the head of personal investing has chosen three strategies investing in sustainable themes across the globe.

“Sustainability is a fundamental theme of ESG as it combines good investment philosophies with doing the right thing,” said Lowcock.

“While investors can make money in the short term from unsustainable businesses, longer term the companies will need to rethink their business models or fail.

“Sustainable investing makes a lot of corporate sense as well, as it should ensure business models are repeatable, and therefore so are revenues.”

He added that for his clients, as certain themes are in their infancy, a such a broad approach to sustainability and looking at funds which are looking across many industries for sustainable businesses, makes the most sense.

“After all, some of these businesses will not become sustainable champions in the long term, and by having a wider approach it provides a degree of protection for investors“, he noted.

Here, Lowcock shares his three sustainability fund picks and reasons for selecting them:

Royal London Sustainable Leaders – Mike Fox looks for sustainability in the companies he invests in. There is a focus on companies with a positive effect on the environment, human welfare, and quality of life. The focus is primarily on the UK but has some exposure to the US and Europe.  The fund consists of companies involved wholly or part in the manufacture of products, industrial processes or provision of services associated with improving the environment and enhancement of human health and safety.  They also look at companies whose management are making above-average efforts in corporate responsibility.

First Sentier Asia Focus – Martin Lau and his team on the First State Asia Focus fund have a philosophy founded on stewardship, considering environmental, labour, and other governance issues as well as engaging with companies to improve things. Capital preservation is key and considered a foundation of long term returns, and it has been a rewarding strategy for investors over the long term in a dynamic but also higher risk area of the world.

Stewart Investors Worldwide Sustainability – This sustainability fund, co-managed by Nick Edgerton and David Gait, draws on the market-leading global equity research and stable investment team at Stewart Investors. Although the strategy is reasonably new, launched in 2012, the process behind this fund has been in place since the 1990s. Fundamental analysis of companies with a heavy focus on the sustainability of their earnings and business models is core to stock selection. There is also preference for high-calibre management and healthy balance sheets leading to a bias to defensive growth shares. The extensive, independent and insightful research has delivered decent performance for investors since inception, and we think it should continue to deliver sustainable returns.

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