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the latest analysis of green and ethical investment

The definition of an Environmental fund?

An Environmental fund is a specific type of thematic fund. It is a fund which invests in companies operating in alternative energy, water purification, waste management, energy efficiency, carbon emissions, or forestry. These are the companies which are attempting to profit from environmental changes in the world driven by cultural, demographic and political change.
Investment funds that are focused solely on climate change would fall under this category, as they look to benefit from the geographical and political changes that climate change will have. There are also funds which take a wider approach, and can consider environmental, but also other themes such as social and demographic, which we call 'Multi-Thematic'.

In the public sphere, the term 'Environmental' is closely linked with terms such as 'ethical' or 'green'. It is important to note that at Worldwise Investor an environmental fund is distinct from an ethical fund, an SRI fund and a responsible fund, it could fit all of these descriptions, or none. 

Fund context:

“Environmental” funds can be found in the Worldwise Investor fund library, an example is Allianz Global Eco Trends, which has the investment themes of Eco Energy, Clean Water and Pollution Controls. However, this has a very different make up to a fund like the Schroders Global Climate Change fund, which is evident from their top ten holdings.

We do not include within the Environmental theme funds which have ethical screens (such as Aberdeen Ethical World) which remove companies which have negative environmental impact relating to Ozone Depletion, Intensive Farming, Mining/Quarrying and Water Pollution.

An Environmental fund looks for companies with positive environmental activities, to date Skandia Ethical is the only ethical investment fund which meets this criteria. This can be found by using the filters in the fund library. While this fund seeks environmental opportunities it excludes nuclear on ethical grounds.

Many Multi-Thematic funds have a high percentage of environmental companies in their portfolios, but are able to diversify into other themes such as health to reduce the risk profile of the fund. A good example of this approach would be Cheviot Climate Assets, which invests in bonds, gold and health. This fund also takes a position on nuclear and genetic engineering, though it does not apply an ethical screen in relation to these issues (see the Worldwise investor Cheviot Climate Assets fundview)

Related funds:

Allianz Global Eco Trends
Quilter Cheviot Climate Assets
Schroder Global Climate Change
Old Mutual Ethical

Useful links:

Worldwise Investor: Guide to Ethical and Green Investing

Worldwise Investor: What is an Ethical Fund?

Worldwise Investor: What is Responsible Investing? 

Worldwise Investor: What is Sustainable Investing?

Worldwise Investor: What is Green Investing?

Worldwise Investor: What is Thematic Investing?

Worldwise Investor: What is SRI Investing?


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Louise Fallonall articles

Louise Fallon starting working for Worldwise Investor as an intern over the summer and has written a number of articles during that time.

Louise is studying for a degree in Mathematics and Economics BSc at London School of Economics and Political Science, and graduates next summer.

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