Our rundown on environmental investment: what it is, how environmental funds have been performing and the top funds.
What is environmental investment?Ethical and environmental funds operate in different ways. Ethical funds tend to focus mainly on screening out companies involved in inappropriate products or practices as well as seeking companies to include with high standards of corporate social responsibility. Conversely, environmental funds usually have a specific environmental theme, such as energy efficiency, low carbon energy production, waste and water management, environmental improvement or a combination of these. Fund managers may invest in companies with a good environmental record or invest in providers of sustainable solutions and their suppliers.
How have environmental funds been performing?Since the financial crisis, the world’s focus on climate change has been largely put on hold. Unit prices have fallen for many environmental funds, an average of 6.03% for the sector over 5 years (Worldwise Investor). However, there is considerable advantage to entering the market at a low point. While shorter term performance may continue to be volatile; over the long term, these investments are likely to perform well.
Environmental investment fund top performers through 2011 (Source Financial Express)
- Cheviot Climate Assets
- Ecofin Water and Power
- Henderson Industries of the Future
- Jupiter Ecology