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32% annual growth for ethical investment 13.08.07

Ethical investment funds have never been popular according to the latest results from the Investment Management Association, the total invested ethically passed £5 billion in January and now stands at £5.6 billion.

While ethical funds remain a small part of the total funds under management, a mere 1.1% according to the IMA’s Sheila Nicoll, “Net retail sales of ethical funds have seen large increases every quarter for the last year, with sales in this quarter alone surpassing those for each of the last four years." Ethical Funds have grown from £4.26bn in the second quarter of 2006 to their present record at £5.6 billion.

It’s hardly surprising that ethical funds are attracting such attention, when you consider that the Co-operative Insurance Services Sustainable leaders fund, managed by Mike Fox, came first out of 293 funds on a 12-month basis earlier this year.

Investing in an ethical fund isn’t any more just for the ethically motivated, quoted in Money Marketing BestInvest’s head of communications Justin Modray said: “The growth in ethical is down to greed more than being environmentally aware and will continue to perform upon that basis. If the FTSE100 performs ethical fund will find it difficult, it hasn’t recently and as a result ethical funds have good track records.”

The recent announcements by Schroders and Jupiter that they will be launching environmental orientated funds, not necessarily using ethical screening in their processes has heated up the debate about the attractiveness of ‘technologies of the future’ to fund managers looking for both short and long term gain.

Best Invests Mark Hilton says “Should your portfolio be turning green? The good news is that if you wish to there is now sufficient choice of ethical equity and bond funds to build a reasonably diverse portfolio. If you’re more concerned about performance I don’t think there is a compelling reason to go green in the shorter term. The potential payback from green investing is likely to be longer term and other more general market factors are likely to influence shorter term performance. Also bear in mind that mainstream fund managers may start to invest more heavily in green stocks if they think there’s money to be made, so it’s likely that conventional portfolios will naturally start to adopt a natural green bias in future.”

Peter Shield

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