Money Observer Fund Awards 2018 - Ethical/SRI

July 18, 2018

BEST EQUITY FUND

Pictet Global Environmental Opportunities

1-year return: 7.6% | 3-year return: 41.1%

A newcomer to our awards, Pictet Global Environmental Opportunities lifts the Best Ethical/SRI Equity fund crown for its consistently solid performance over the longer term. It has beaten peers in the IA global sector by 6.4 per cent over the past year and by 7.9 per cent over three years.

Three managers are involved – Luciano Diana, Gabriel Micheli and Simon Gottelier – all of whom are part of Pictet Asset Management’s thematic equities team. With this fund, they seek capital growth by investing principally in the securities of companies that are active throughout the environmental value chain.

They favour companies operating in services, infrastructure, technologies and resources related to environmental sustainability. Energy efficiency is the biggest sector allocation at almost 30 per cent.

The investment universe is not geographically restricted. More than half of the fund’s assets of £486 million are in the US, with the remainder in the UK, continental Europe and China.

BEST MIXED ASSET FUND

Royal London Sustainable World

1-year return: 6.3% | 3-year return: 34.3%

This £408 million fund lifts this accolade for the fi fth consecutive year. It was also our Best Mixed Asset Higher Risk fund in 2015 and highly commended in 2016. A Rated Fund since 2013, it been run by Mike Fox since inception in 2009.

He can invest in equities and bonds, but has tended to keep equities close to the maximum weighting of 85 per cent. He favours growing, innovative companies that are having a positive impact on society. This is supplemented by companies showing leadership in environmental, social and governance (ESG) management. Fox believes this approach makes the fund less volatile than others with a wider remit.

The economic environment has a marginal influence on his choice of shares. He is primarily interested in innovation and structural growth rather than changing the fund to reflect shorter- term economic conditions. Although he can invest globally, he tends to be biased towards the US and other developed markets, because that is where he typically finds innovative companies and those with the strongest ESG standards.

BEST BOND FUND

Rathbone Ethical Bond

1-year return: 5.3% | 3-year return: 14.9%

Rathbone Ethical Bond has notched up a four-year winning streak in this category. It has also been a Rated Fund since 2013. The £969 million fund has a higher income target than most of its peers and is currently yielding 4 per cent.

Bryn Jones has been its manager since 2004. Assistant manager Noelle Cazalis joined him in 2016. They predominantly invest in investment- grade bonds and use both positive and negative screening to make their selections. They seek to identify economic trends and thematic ideas and then look for the best bonds to buy within that framework.

They use a ‘four Cs plus’ approach to assess credit quality. This looks at character, capacity, collateral and covenants, with the ‘plus’ being conviction – in order to achieve long-term above-average performance, they must think differently from the market. An ethical screen is applied at the final stage, ruling out companies involved in mining, arms, gambling, pornography, animal testing, nuclear power, alcohol and tobacco.

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