The investment platform highlights two funds that could be used by investors concerned about the ongoing climate emergency.
BNY Mellon Sustainable Real Return and FP WHEB Sustainability are two funds that investors hoping to improve the world might consider, according to investment platform Hargreaves Lansdown.
Recent events, such as flooding in Pakistan, a “megadrought” in the western US that is considered the driest period in 1,200 years, and a heat wave in China that some say is the most severe ever recorded, highlight that the world is facing a climate emergency.
Tara Clee, ESG Analyst at Hargreaves Lansdown, said: “Increasingly, investors are concerned about whether their portfolio is on the right side of the green transition. Taking environmental, social and governance (ESG) factors into account, along with the usual financial considerations, can be a great way to ensure your investments are aligned with the net-zero transition and are able to capitalize on opportunities that may arise.
“But many fund managers go further and implement exclusions, increase engagement and, for those who want to be at the forefront of solving the climate crisis, invest with impact, investing in companies that have a measurable positive effect on the environment. environment or society. like those that develop electricity with low carbon emissions.”
Below, Clee highlights two funds that he believes can help investors make a greater positive impact in the future.
BNY Mellon Sustainable Real Return
His first choice is the BNY Mellon Sustainable Real Return fund, which resides in the IA Targeted Absolute Return sector and is managed by Philip Shucksmith and Matthew Brown.
The £491m fund takes a similar approach to the respected BNY Mellon Real Return fund, investing in a mix of equities, corporate bonds, government bonds, commodities and cash with the aim of earning positive returns in a variety of conditions. market.
The portfolio is built around a ‘yield-seeking core’ of assets that the managers believe can provide long-term growth, while a ‘stabilizing layer’ of investments offers additional protection. At its core, the fund emphasizes not losing money rather than earning it to drive long-term performance.
Fund performance vs. sector since inception
Source: FE Analytics
However, managers apply an additional layer of ESG considerations when creating the portfolio.
“The fund’s sustainable ‘red lines’ mean that companies that violate the UN Global Compact Principles and those inconsistent with the goal of limiting global warming to 2°C are not considered for the fund,” Clee explained.
“It will also not invest in companies that derive more than 10% of their revenue from tobacco, alcohol, gambling and various other controversial industries. The team also engages with the companies it invests in on a variety of ESG issues.”
MSCI analysts say that 17% of BNY Mellon Sustainable Real Return holdings are classified as ‘ESG Leaders’, while only 2% are ‘ESG Laggards’.
FP WHEB Sustainability
Clee’s second pick is FP WHEB Sustainability. Led by Ted Franks, this £838m global equity fund combines a responsible investment approach based on a range of long-term themes with more traditional financial analysis.
The portfolio tends to have high-quality growth companies that are leaders in their sector and trade at attractive valuations, while providing solutions to critical environmental and social challenges facing society.
Fund performance vs. sector and index over 5 years
Source: FE Analytics
“WHEB believes that investing in and supporting businesses that have a positive impact on people and the planet can help achieve a more sustainable, zero-carbon economy. They invest in companies that have a positive impact within nine investment themes [and] companies that have a negative impact on the environment and society are not considered,” said Clee.
These nine themes are made up of four social themes (education, health, safety, and wellness) and five environmental themes (cleaner energy, environmental services, resource efficiency, water management, and sustainable transportation).
According to MSCI, 59% of FP WHEB Sustainability holdings are ‘ESG Leaders’ and none are ‘ESG Laggards’.