Download 2015 THE WINNERS - Environmental and Socially Responsible

WINNERS AND SPINNERS REPORT - 2015
THE WINNERS - Environmental and Socially Responsible ‘Winners’ of 2015
Responsible and ethical investing is growing steadily in the UK but our view is that many of the
products and services offered to consumers do not truly reflect their main concerns. In this report
we aim to highlight the “winners” helping to grow the market by providing funds which respond to
demand from today’s responsible investors who want their money to make a positive social and
environmental impact. We also reveal investment groups we believe are potentially misleading
consumers by marketing “ethical” products which contain investments which would trouble many
responsible investors, such as fossil fuel companies.
In this report we also provide background on leading innovators ~ organisations making
fundamental, beneficial changes to the market through creating new types of products and services.
Our five “winners” of 2015 demonstrate excellence in these areas:






Strong performance and long term investment strategy with promising returns
Actively working to reduce or eliminate exposure to fossil fuels contributing to climate change
Proactive investment strategy in solutions to worldwide social and environmental problems
Making it easier to invest ethically by improving access or information
Providing consumers with excellent responsible investment products and services
Excellent standards of transparency making public their underlying investment holdings
Fund Size as
at Sept 2015
£83M
£210M
£16.9M
£31.4M
£315.6M
Fund
1yr
3yr
5yr
WHEB Sustainability C Acc in GB
Alliance Trust Sustainable Future UK Growth 1 Acc in
GB
Premier ConBrio B.E.S.T. Income General Inc TR in GB
Quilter Cheviot Climate Assets Fund
Impax Environmental Markets Investment Trust PLC
FTSE All Share TR in GB
2.66
12.8
32.66
46.85
22.77
72.38
8.24
1.06
-4.41
-3.83
33.87
22.73
46.19
24.06
*
36.15
30.45
43.54
Information provided by www.castlefield.com Source: Fe analytics. As at 25-9-2015
*Fund operated under a different mandate 5 years ago
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Investment Life & Pensions Moneyfacts recent research showed that, overall, ethical/SRI funds beat
returns generated by traditional funds in 14 out of the 20 (70%) different investment scenarios
surveyed, with the average ethical fund returning 7.8%, compared with 6.5% from the average nonethical fund, in the past 12 months. (Source: Moneyfacts July 2015)
John Ditchfield, Partner at Castlefield, says: “Our “winners” have delivered good returns over the last
five years. But in investment it is more important to look to the future than the past. They are all
funds with long-term sustainable investment strategies, and are well placed to spot opportunities in
the emerging green economy. In order to continue growing the UK’s responsible investment market
we really need two things; investment groups and organisations prepared to commit to devote time
to educating financial advisers and the public, and investment products which offer strong financial
returns.”
1.
WHEB Sustainability Fund (Fund Size £83M)
The WHEB Sustainability Fund offers investors an excellent investment option for these reasons:
Unrivalled transparency and clarity of information on the fund’s strategy and holdings
The group organised an annual investor conference event for investors in May 2015 in order to
bridge the gap between fund managers and their shareholders. The management of the fund is
transparent, including information on investment decisions and minutes from the Independent
Advisory Committee meetings published on the group website. The fund group is committed to
engaging with investors and advisers through an innovative programme of events and investor days,
the fund AGM and high quality newsletters, blogs and briefings.
Excellent performance against its peers and conventional benchmarks
WHEB is + 32.66% against the FTSE All Share of 24.06% over three years and over one year the fund
is also ahead. Given the fund has such a clear long-term investment strategy we would hope
performance returns continue to beat the market.
Top 10 Holdings as at August 31, 2015
Rank
Change


%
1
FRESENIUS SE & CO KGAA
2.24
2
ACUITY BRANDS INC
2.15
3
MEDNAX INC
2.03
4
DANAHER CORP
2.00
5
CERNER CORP
1.95
6
NOVO-NORDISK AS
1.95
7
WABTEC CORP
1.92
8
LKQ CORP
1.90
9
ECOLAB INC
1.89
10
SMITH(A.O.)CORP
1.87
Top 10 total percentage weighting

Name
19.90
Faller
Riser
No Change
2

New Entry
Performance:
Although the fund is lagging behind Equity Ethical Total Returns, it is outperforming the FTSE All
Share over 1 and 3 years, as noted above.
WHEB Sustainability Facts and Figures
The WHEB Listed Equities Team has six members with an investment team of four who run a core
global equities strategy focused exclusively on investing in companies ‘providing solutions to
environmental and social challenges’ such as ageing populations, climate change and resource
scarcity. The team has been in place for nearly four years over which period assets under
management have grown from £25m to over £110m. The flagship FP WHEB Sustainability Fund has
assets of over £80m as of 31st August 2015.
Case Study for a Specific Investment Theme
The FP WHEB Sustainability Fund has a holding in Acuity Brands, an American light-maker that is at
the front of the LED revolution. They have been gaining market share from their larger rivals who
still supply older technologies, but the company is still relatively unknown and sits outside of the
main investment indices such as the S&P 500. The WHEB fund started a position in May 2012 and
since then the stock has risen nearly 250% against the market which has risen only 50%.
Light Emitting Diodes (LEDs) represent a radical change in lighting technology which is massively
disrupting the industry. LEDs are 80% more energy efficient than incandescent lighting and because
they last more than fifty times as long, you are more likely to need to remodel your kitchen before
you need to replace the lighting. LEDs are semi-conductor based, and so can be configured to
produce different lighting intensities and colours and are controllable through wireless technology.
Because of these benefits the LED market has been almost doubling every year for the last five years
and this is expected to continue for at least another four years.
Quotes from George Latham -Managing Partner and Chief Investment Officer at WHEB
“Sustainable investing is a shrewd way of finding growing markets in a world where growth is very
scarce. The FP WHEB Sustainability Fund is helping investors tap into these growth markets and
delivering competitive returns while also having a positive impact on the world around us. Investors
want financial products that deliver competitive returns and a growing proportion – particularly
among younger investors – are demanding investments that also have a positive impact on the world
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around them. Sustainable investment products like the FP WHEB Sustainability Fund are ideally
positioned to meet this demand.”
2.
Alliance Trust – Sustainable Future Team’s SRI Hub; Sustainable Future UK Growth (fund size
£210.4M)


Growing the Market: Providing quality information to investors and the industry
Transparent: Alliance Trust publish all of their individual fund holdings and are open and
transparent with regard to decisions taken in relation to portfolio holdings - providing detailed
commentary and explanation to advisers and their clients
Climate Change awareness: In 2014, Alliance Trust announced the carbon dioxide emissions of
companies held in their Sustainable Future Equity funds. On average they emitted 59% less than
the market in the 2009-2012 period, and they are committed to reduce that still further (Source:

Alliance Trust)


Performance: Four funds from its award winning Sustainable Future fund range have been
recognised as among the best performing ethical/SRI funds by two separate industry bodies
The latest research published in July 2015’s Investment Life & Pensions Moneyfacts found ATI’s
Sustainable Future UK Ethical and Sustainable Future UK Growth funds to have enjoyed the two
strongest performances in the past 12 months when compared to other sustainability focused
products, seeing 17.9% growth and 15.7% growth, respectively
Olivia Bowen, Partner at Castlefield, says:
“The Alliance Trust Sustainable Future team go from strength to strength, clearly demonstrating that
ethical funds can and do beat conventional benchmarks. They have invested heavily in their Socially
Responsible Investment (SRI) hub, which is an excellent on-line source of information on ethical
investment for the public and our industry. They have also been touring the country speaking to the
financial adviser community about the merits of sustainable investments.”
Sustainable Future UK Growth Fund:
Top 10 Holdings as at August 31, 2015
Rank
Name
%
1
VODAFONE GROUP PLC
5.25
2
LEGAL & GENERAL GROUP
4.25
3
KINGSPAN GROUP
4.24
4
BT GROUP
4.12
5
ARM HLDGS
3.64
6
PRUDENTIAL PLC
3.61
7
LLOYDS BANKING GROUP PLC
3.29
8
CREST NICHOLSON HLDGS PLC
3.23
9
INTERCONTINENTAL HOTELS GROUP
3.09
10
NEXT
3.06
Total

Change
37.78
Faller
4

Riser

No Change

New Entry
Performance:
3 Premier ConBrio B.E.S.T Income Fund (Fund Size £16.9M)
This fund has a place in our top 5, for the following reasons:





Growing the market and creating choice: This fund is one of only two screened UK Equity
Income funds, and the only one to avoid Fossil Fuels. It was created in response to a clear need
for more options in this sector
Transparent: Full list of holdings available monthly and in the Annual Report, along with
exposure in different sectors.
Fossil Fuel Avoidance: It is innovative, being the only equity income fund to exclude the oil and
gas and mining sectors, and rare in the wider market
Positive Investment Strategy: The fund actively supports direct investment into alternative
energy sources. The fund is focused on long-term returns with the aim of an above-market
income yield for investors
Performance: We show three years’ performance as the fund is relatively new. Over 3 years
there is a lag against the equity income sector which reflects a cautious stance in 2013 when UK
equities had a very strong year. However, over 1 and 2 years the fund is ahead of the sector, and
ahead of the FTSE All Share over 1 and 3 years
John Ditchfield on ConBrio B.E.S.T. Income Fund:
“This highly innovative fund offers investors a high level of income (4%) with no exposure to fossil fuel
extraction, a unique combination in the UK investment market. The fund also publishes details of all
holdings and has a clear and transparent investment process.”
5
Top 10 Holdings as at August 28, 2015
Rank
Change
Name
%
1
GLAXOSMITHKLINE
5.23
2
CARILLION PLC
4.58
3
ASTRAZENECA PLC
4.42
4
NATIONAL GRID
3.93
5
BRITISH LAND CO PLC
3.75
6
SSE PLC
3.71
7
AVIVA
3.70
8
GREENCOAT UK WIND PLC
3.57
9
RENEWABLES INFRASTRUCTURE GRP(THE)
3.15
Total

Faller

Riser

No Change

New Entry
36.04
Performance:
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
ConBrio B.E.S.T Income I Inc
FTSE 350 High Yield TR GBP
(Source: Morningstar Sept 15)
60.0%
40.0%
20.0%
0.0%
-20.0%
IA OE UK Equity Income
ConBrio B.E.S.T Income I Inc
(Source: Morningstar Sept 15)
6
4. Quilter Cheviot Climate Assets Fund (Fund Size £31.4M)




Transparency: The full list of holdings is available for investors and for advisers.
Position on Fossil Fuels: The fund does not have direct fossil fuel exposure/holdings- i.e. does
not invest in natural gas or oil exploration or development. Until last year, the fund used to
invest in natural gas, as the lowest carbon form of traditional energy generation. After reviewing
the environmental impacts of shale gas, they decided to avoid natural gas too and divested from
BG Group early this year.
Positive Investment Strategy: Invests in companies providing the clean and more efficient
products and technologies needed to deliver the ‘New Economy’. Focuses on positive inclusion,
driven by sustainability themes like energy, food, health, energy efficiency, clean transport,
resource management and water management.
Performance: The fund benefits from flexible asset allocation and stock selection, which allows
the fund management team to ensure that they are not constrained by one particular
investment style (such as growth, value etc.). The fund has shown persistent outperformance of
the benchmark over the last 5 years.
Olivia Bowen comments: “The flexible approach adopted by the Quilter Cheviot team during different
economic cycles has contributed to excellent long-term performance. Its thematic approach focuses
on sectors that we believe will benefit from a low-carbon future, and the team have understood that
water resource management will be vital to the future success of many businesses.”
Top 10 Holdings as at July 31, 2015
Rank
Change
Name
1
UNION PACIFIC CORP
3.48
2
TREASURY 4.5% GILT 7/12/42 GBP
3.40
3
RENEWABLES INFRASTRUCTURE GRP(THE)
3.20
4
GEBERIT AG
3.12
5
NATIONAL GRID
3.05
6
SEVERN TRENT PLC
2.84
7
REXEL
2.58
8
GREENCOAT UK WIND PLC
2.37
9
SCHNEIDER ELECTRIC SE
2.34
10
WOLSELEY PLC
2.28
Total




%
28.66
Faller
Riser
No Change
New Entry
The fund has outperformed its benchmark consistently:
7
Contact: Claudia Quiroz: [email protected]
5. Impax Asset Management Environmental Markets PLC (Fund Size £315.6M)



Launched in Feb of 2002 Impax’s Environmental Markets Investment Trust is one of the UK’s
longest established specialist environmental investment funds.
Since launch the trust has delivered strong returns to investors, as detailed below. Over ten
years the fund’s ordinary shares have delivered an annual return of 4.99% (FE Analytics as at
22/09/2015). The chart below gives the ten year performance of the trust’s ordinary shares as
62.70%.
Impax Environmental Markets is one of a tiny minority of UK investment funds which work to
track and then demonstrate their positive social and environmental value across a range of
measures. By publishing its data and methodology, Impax aims to encourage other investment
products to take a similar approach to reporting on non-financial matters.
Top 10 Holdings as at August 31, 2015
Rank
Change
Name
%
1
KINGSPAN GROUP
2.7
2
XYLEM
2.7
3
CLEAN HARBORS INC
2.5
4
HORIBA
2.5
5
PALL CORPORATION
2.5
6
AMERICAN WATER WORKS COMPANY
2.3
7
ENSYNC INC
2.3
8
TOMRA SYSTEMS
2.2
9
NBE INDUSTRIER
2.2
10
DONALDSON CO INC
2.2
Top 10 total percentage weighting



24.1
Faller
Riser
No Change
8

New Entry
John Ditchfield comments: “Impax Environmental Markets is what we would term a “pure play” fund
focusing on just environmental business ~ its performance will therefore differ substantially from a
broad market index such as FTSE All Share; again this is really about identifying the long-term
potential for growth in newer markets and areas”.
Performance:
Why we regard view this as a “winner” of ethical and responsible investing
 In recent years a range of investors have moved to consider environmental impact as part of
their investment approach; this includes pension funds and endowments as well as private
individuals. Many investors view carbon emissions and contribution to global warming as
paramount among a spectrum of environmental and social issues.
 Impax Environmental Markets Plc is the first UK listed equity fund to demonstrate a net positive
carbon impact. Impax aim to become a leader in this type of reporting by publishing their
reporting methodology.
 Impax also provide details of other key environmental impacts:
 CO2 -513,000 tco2 emissions avoided which is equivalent to taking 230,000 cars off the road
 257,000 MWh of renewable energy generated which is equivalent to 61,000 households’
electricity consumption
 102,000 megalitres of water treated or provided which is equivalent to 619,000 households’
annual water consumption
 247,000 tonnes of materials recovered/waste treated which is equivalent to 253,000
households’ waste arising
External verification and testing of the Impax methodology was provided by Ernst and Young and full
details of Impax’s approach can be accessed at www.impaxenvironmentalmarkets.co.uk
John Ditchfield says: “Impax have developed a very strong proposition for investors of all types who
are looking to benefit from the likely growth of global environmental protection and resource
management markets. We also welcome and encourage their stance of reporting back to investors
on social and environmental impact”.
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INNOVATION AND TRENDS IN RESPONSIBLE INVESTING
There is significant demand in the UK investment market for Impact Investment products,
investments which have very direct social and environmental benefits. This is becoming a growing
trend in the UK particularly with the emergence of the Social Stock Exchange which is the world’s
first Impact Investment platform, and Ethex which links investors directly with unlisted investments
making a positive social or environmental Impact.
Ethex – Positive Investment Platform
Ethex was launched in 2012 after many years of development, achieving a great step forward for
“positive investing” via the provision of a website where members of the public can research and
invest in different social or environmental investments via bonds, cash accounts, and shares. The
investment range available includes, for example, social housing and solar energy.
Ethex won Investment Deal of the Year at the 2014 Social Enterprise Awards, the Finance Award at
the 2014 PEA Awards, the Sustainable Finance Award at the 2015 Sustainable City Awards and, most
recently, the Community Energy Funding Award in the 2015 Community Energy
Awards. www.ethex.org.uk
This innovative ethical investment platform has provided access to social impact investments direct
to the public, making it simpler and easier to invest. The money they expect to have raised by Good
Money Week will total £20 million.
Ethex have robust due diligence processes in place and offer the following:
 List of leading ethical investments that have already been researched.
 Minimum investment only £1 in some cases.
 Financial performance indicators - explain the mysteries of the profit and loss account and
balance sheet.
 Social and environmental performance indicators - show you how the business is performing,
both in terms of its key social mission and a number of other standardised indicators.
 Governance and people performance indicators - gives you an idea of who owns the business
and how it is run, as well as the people behind it.
Social Stock Exchange (SSX)
The SSX is the world’s first regulated exchange dedicated to businesses and investors seeking to
achieve a positive social and environmental impact - as well as a financial return; it is therefore right
at the heart of the UK’s responsible investment movement.
John Ditchfield says “I see this as a natural step on from the Corporate Social Responsibility approach
many businesses have adopted, whereby a conventional mainstream business then adds in a positive
element to its normal activities. SSX is all about recognising businesses with values at their core and
then connecting them with investor capital. At Castlefield, we see the continued success of the Social
Stock Exchange as vitally important for the continued growth of the responsible investment sector.”
Launched in June 2013 the Exchange now lists 22 companies with a total market value of £1.5bn, all
businesses which make a significant positive contribution to society and the environment. Prior to
listing on the exchange all businesses pass through a careful screening and selection process (Impact
10
Reporting). Once this stage is completed businesses have the option to list on the exchange ~a
segment of Icap Securities & Derivatives Exchange (ISDX) ~ and information is made available to
investors via the SSX website. This process enables businesses with clearly defined positive impacts
to raise capital from private investors via a regulated public investment market and investors benefit
because they can access Impact Reports on listed businesses.
Case Studies on SSX: information supplied by Castlefield
Menhaden - Menhaden Capital PLC is a closed-ended investment trust. The Company’s central
investment objective is to generate long-term shareholder returns, predominantly in the form of
capital growth, by investing in businesses and opportunities that deliver or benefit from the efficient
use of energy and resources. Our core belief is that companies that supply products and services that
help to conserve scarce resources, reduce negative environmental impacts and improve resource
efficiency, enjoy faster growing end markets and in turn help to deliver more sustainable economies.
Market Cap - £80m.
Capital for Colleagues - Capital for Colleagues PLC is an investment vehicle focused on opportunities
in the Employee Owned Business (“EOB”) sector. The company has been quoted on the ISDX Growth
Market (www.isdx.com) since March 2014. It is based in Manchester and has offices in London. In
August 2014 the company co-founded a new advisory business to provide advice and support to
EOBs or companies looking to incorporate employee ownership schemes. Market Cap - £4.6m.
SSX Fact and Figures
Total market cap £1.5bn
Number of businesses listed to date: 22
All applicants are pre-screened before being invited to submit an impact report. Less than 50% of
those companies expressing an interest move on to the impact reporting stage, whilst less than 70%
are then offered membership after the first reading of the report.
Regional SSX – SW. The Social Stock Exchange launched its first regional stock exchange in early
September in the South West. The South West is already recognised as an established hub of impact
investing. Social Stock Exchange members active in the area include Hydrosense who are developing
a series of small-scale hydroelectric power plants in the area; Good Energy who operate both a wind
and a solar farm in Cornwall; and Broadway Partners, a provider of broadband to rural communities.
Tomas Carruthers (CEO), SSX, says: “Impact Investing isn’t philanthropy. It’s all about delivering a
measurable environmental or social impact, as well as having the ability to produce an at-market
rate of return for investors.
Having these impact investments independently validated and listed in a single location and tradable
on a secondary market is vital if investors are going to be able to discover the options available to
them - then have the ability to trade in and out of these positions to meet their own goals.”
THE SPINNERS - Environmental and Socially Responsible ‘Spinners’ of 2015
In our view, the Spinners investment funds need to improve their portfolio of stocks by not just
employing negative screening but also embracing positive investments, and reducing their exposure
to fossil fuels before these become stranded assets. They also need to be more transparent about
how they manage the funds, and show greater commitment to growing the sector.
11
John Ditchfield comments: “The Spinner funds appear to offer an ethical approach to investing but
the reality is really very different from what most individual investors would regard as ethical. We
feel this potentially undermines the credibility of ethical and responsible investment product and we
are calling upon providers to engage with the investing public so as to ensure they are aware of what
they are buying”.
Spinners fund performance
Fund Size as
at Sept 2015
£169.1M
£287.8M
Fund
1yr
3yr
5yr
Aberdeen Ethical World Equity Fund
Legal and General Ethical Trust
-13.75
6.57
2.09
42.46
11.00
64.84
Prudential Socially Responsible Fund
-1.78
28.88
Sovereign Ethical Fund
-4.38
19.83
Virgin Climate Change Fund
-1.86
28.70
FTSE All Share TR in GB
-3.83
24.06
Information provided by www.castlefield.com Source: FE Analytics. As at 25-9-2015
39.61
40.85
38.25
43.54
£33.2M
£25.6M
£60.8M
1. Aberdeen Ethical World Equity Fund (Fund Size £169.1M)
This fund has £6.8million invested in a major shale oil extractor, EOG Resources (formerly Enron Oil
& Gas) and has recently made the decision to add to this holding. In 2011 EOG Resources was
accused of breaking US laws while burying waste and in the same year a blowout occurred at one of
their wells, resulting in natural gas and 35,000 gallons of drilling wastewater leaking into the ground
over a period of 16 hours.
Its largest holding is PepsiCo at 4.4% of the fund i.e. £7.44M.This is a very water intensive company,
offering little in the way of benefit to humanity or the plant. Around 663 million people are currently
without access to clean drinking water, according to a recent United Nations Children’s Fund
(UNICEF) report.
Simon Holman, Partner at Castlefield Investment Partners, states: “Really, Aberdeen’s two fund
options aren’t remotely suitable for anyone with environmental concern. Ethical World contains BG
Group(Shale gas), BHP Billiton (Mining), ENI (Italian State Oil), Centrica (Fracking), Vale (Brazilian
State mining), Pepsi (High water usage and no social benefit), EOG plus other oil services. Responsible
UK Equity is even worse, also owning BP and Shell (Oil), Rio Tinto (Mining), plus Cobham (Aerospace
& defence) and ABF (which owns Primark) in addition to BG, BHP and Centrica. They really are funds
that give the sector a bad name and sit as easy pickings for people who want to knock ethical
investment by pointing out greenwash funds.”
Top 10 Holdings as at August 31, 2015
Rank
Change
Name
%
1
PEPSICO INC
4.40
2
EOG RESOURCES INC
4.00
3
ZURICH INSURANCE GROUP LTD
3.40
12
4
TAIWAN SEMICONDUCTOR MANUFACTURING
3.40
5
COMCAST CORP(NEW)
3.00
6
EXPERIAN PLC
3.00
7
ORACLE CORP
2.90
8
CASINO GUICHARD-PERRACHON
2.90
9
SINGAPORE TELECOMMUNICATIONS
2.90
10
JONES LANG LASALLE INC
2.80
Total




32.70
Faller
Riser
No Change
New Entry
Performance:
The fund has significantly underperformed its benchmark over the last 2 years:
2. Legal & General Ethical Trust (Fund Size £287.8)
The investment objective of this Trust is to secure capital growth from a portfolio of securities for
companies whose business conforms to a range of ethical and environmental guidelines. Securities
representing all such companies in the FTSE 350 Index will be held with weightings generally
proportionate to their market capitalisation.
The Legal & General Ethical Trust is a negative screening fund which will not invest in companies if
they are in breach of its negative criteria. The sector weighting shows a holding of 3.97% in oil and
gas.
Top 10 Holdings as at August 31, 2015
Rank
Change
Name
%
1
VODAFONE GROUP
6.85
2
LLOYDS BANKING GROUP PLC
5.11
3
BT GROUP
4.14
4
PRUDENTIAL PLC
4.11
5
BG GROUP
3.97
13
6
SHIRE PLC
3.57
7
NATIONAL GRID
3.43
8
AVIVA
2.25
9
TESCO CORP
1.87
10
LEGAL & GENERAL GROUP
1.65
Total
36.95
Performance:
The fund’s performance has generally been better than the UK All Companies sector over the last
five years:
3. Prudential Socially Responsible Fund (Fund Size £33.2M)
The investment strategy of the fund is to invest in the shares of UK companies which pass a set of
socially responsible criteria. The fund is actively managed against its benchmark, the FTSE4Good UK
Equity Index, which is limited to those companies in the FTSE All-Share Index which meet set ethical
criteria.
The top ten holdings include Royal Dutch Shell, Lloyds Bank, mining company Rio Tinto and alcoholic
beverage company Diageo.
Olivia Bowen makes the point: “Whilst this fund may screen out obvious sectors such as tobacco
companies and arms manufacturers, its light ethical screens could make a values-based investor feel
that investing responsibly is not worthwhile. For example, it’s rare to see a mining company in an
ethical fund because of the environmental and human rights issues associated with the sector.”
Top 10 Holdings as at August 30, 2015
Rank
1
Change
Name
HSBC HLDGS
%
5.50
14
2
ROYAL DUTCH SHELL
4.80
3
VODAFONE GROUP
4.00
4
GLAXOSMITHKLINE
3.60
5
LLOYDS BANKING GROUP PLC
3.60
6
BT GROUP
3.10
7
DIAGEO
2.80
8
RIO TINTO
2.70
9
ASTRAZENECA PLC
2.70
10
SHIRE PLC
2.60
Top 10 total percentage weighting
35.40
Performance:
The fund has generally underperformed the UK All Companies benchmark:
4. Sovereign Ethical Fund (Fund Size £25.6M)
This Fund is managed by Sovereign Unit Trust Managers Limited, a wholly owned subsidiary of
Teachers Provident Society (TPS). This fund’s stated investment policy is to avoid companies whose
activities contravene certain negative criteria. It has no positive criteria applied.
It is ranked 206/282 in its sector over 1 year with around 7% held in oil and gas.
Top 10 Holdings as at August 31, 2015
Rank
Change
Name
%
1
HSBC HLDGS
4.93
2
ROYAL DUTCH SHELL
3.26
3
GLAXOSMITHKLINE
3.17
15
4
VODAFONE GROUP
2.93
5
UNITED UTILITIES GROUP PLC
2.68
6
ASTRAZENECA PLC
2.52
7
JOHNSON MATTHEY
2.35
8
SEVERN TRENT PLC
2.34
9
LLOYDS BANKING GROUP PLC
2.18
10
BARCLAYS PLC
2.13
Total
28.49
Performance:
The performance of the Sovereign Ethical fund has been poor and is 3rd quartile over 1, 3 and 5
years
5. Virgin Climate Change Fund (Fund Size £60.8M)
The fund literature starts well, by stating that: “By supporting the companies that adopt greener
solutions we can show that addressing the potential impacts of climate change is best for their
financial future, as well as our planet. The Virgin Climate Change ISA invests in specially selected
businesses (predominantly in the UK and Europe) who aim to drive outstanding profit growth and
have a lighter environmental footprint.”
Despite the remit to invest in “environmentally aware capitalism” (Source: Interim Report &
Financial Statements 31.3.15) Shell features in the top 10, making up 4.14% of the fund or £2.6M
invested.
Top 10 Holdings as at August 31, 2015
Rank
Change
Name
%
1
ING GROEP N.V
4.27
2
INTESA SANPAOLO SPA
4.27
3
ROYAL DUTCH SHELL PLC CLASS A
4.14
16
4
ROACH HOLDING AG DIVIDEND RIGHT CERT.
4.03
5
LLOYDS BANKING GROUP PLC
3.61
6
VODAFONE GROUP
3.47
7
BAYER AG
3.46
8
BANCA POPOLARE DI MILANO
3.14
9
BT GROUP PLC
3.14
10
KERRY GROUP PLC
3.10
Total
36.62
Performance:
The fund has generally tracked its benchmark:
APPENDIX
BEST PERFORMING INVESTMENT FUNDS
Wider Ethical Fund Performance
Top-performing Ethical funds over the last 12 months, also with their 5 year performance
Cumulative performance
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Fund
Standard Life Investments UK Ethical Ret
Alliance Trust UK Ethical A Acc
Alliance Trust Sustainable Future UK Growth 1 Acc
Kames Ethical Equity A Acc
F&C Responsible UK Income 1 Acc
FTSE All Share TR in GB
1yr
12.9
11.5
11.5
9.1
8.3
-3.83
5yr
81.8
62.7
61.1
73.2
63.0
43.54
Information provided by www.castlefield.com Source: Fe analytics. As at 25-9-2015
Top-performing Ethical funds in terms of their 5 year performance history
Cumulative performance
Fund
1yr
5yr
Premier Ethical A Inc
7.6
85.7
Standard Life Investments UK Ethical Ret
12.9
81.8
Henderson Global Care UK Income A Inc
7.5
77.4
Royal London Sustainable Leaders Trust C Acc
7.9
76.6
Kames Ethical Equity A Acc
9.1
73.2
FTSE All Share TR in GB
-3.83
43.54
Information provided by www.castlefield.com Source: FE Analytics. As at 25-9-2015
Olivia Bowen comments: “We can see from this that Standard Life and Kames’ funds have been topperformers not only over the last 12months, but also the last 5 years demonstrating consistent
performance for investors.“
Castlefield is a trading name of Castlefield Investment Partners LLP (CIP) and of Castlefield Advisory
Partners Limited (CAP) and is a registered trade mark and the property of Castlefield Partners
Limited (CP).
CIP is authorised and regulated by the Financial Conduct Authority and is a member of the London
Stock Exchange. Registered in England and Wales No. OC302833. Registered Office: St George’s
House, 215-219 Chester Road, Manchester M15 4JE.
CAP is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales
No. 6584365. Registered Office: 9th Floor, 111 Piccadilly, Manchester M1 2HY.
CP is registered in England and Wales No. 06942320. Registered Office: 9th Floor, 111 Piccadilly,
Manchester M1 2HY.
All the above corporate entities are part of the Castlefield employee-owned group. Please remember
that the value of investments and the income derived from them can go down as well as up and that
past performance is not necessarily a guide to future performance. Therefore, any decision to make
an investment should not solely be based on an assessment of past performance figures.
Please also bear in mind that the information in this document is not intended as an offer or
solicitation to buy or sell securities or any other investment or banking product, nor does it
constitute a personal investment recommendation.
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Finally, to avoid this small print section becoming longer than the preceding body of the report,
please refer to our website for other important information before reaching any final decision to
engage our services: www.castlefield.com
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