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Fund EcoMarket

the sustainable, responsible and ethical investment information hub

Sustainable, responsible and ethical fund styles explained

SRI Styles Directory

The Fund EcoMarket ‘SRI Styles’ are designed to help you find your way around funds in the sustainable, responsible and ethical universe more easily. We group funds according to what they are designed to do –  from an ‘ethical’, ‘ESG’ and ‘SRI’ perspective.  Our focus is on ‘what funds consider’ and the extent to which it is embedded in fund strategy.

In short, SRI Styles group ‘ethically similar’ options together.

The aim of this is to help users to recognise key similarities and differences (which drive stock selection), so that individual investor’s aims can be met more easily.

SRI Styles work on the basis that it is best to keep things simple – and to avoid industry jargon as far as possible… however they are only a starting point.

For investors looking for specific issues or a particular approach you should use the additional filter options, text and links provided on Fund EcoMarket.

Please note there are variations within each SRI Style (eg different issues may be considered)  and crcossover between many of the styles (eg most funds consider climate change).

 Directory and links to individual ‘Styles’ pages

Funds which focus on a specific issue or theme – often alongside screening criteria and engagement:

  • Sustainability Themed funds focus significantly on (environmental and social) sustainability  issues, opportunities and themes when selecting investments.  These funds tend to have forward looking strategies, favouring companies that show ‘sustainability leadership’, are ‘solutions companies’  or help to facilitate the ‘transition’ to greener lifestyles.  They may also have ‘ethical’ exclusion criteria and encourage positive change through stewardship activity.
  • Environmental Themed funds significantly integrate environmental issues into investment strategies.   Their focus is often around longer term environmental and resource related issues, risks and opportunities. May focus on a single issue, industry or resource. May have ‘ethical’ exclusion criteria and encourage positive change through stewardship activity.
  • Social Themed funds focus on ‘people issues’, investing in assets that help to address social challenges such as employment, education, housing and other basic necessities of life. Strategies vary.

Funds which focus on ‘ethical’ or ‘values based’ issues – normally by employing negative and/or positive screening criteria – typically alongside  ESG considerations and engagment activity:

  • Ethical Funds – focus on ‘values based’ issues typically alongside considering ESG (environmental, social and governance) and sustainability related issues.  These funds set out where they aim to invest and avoid in their published criteria. Some have extensive exclusions others may make more balanced decisions – balancing pros and cons.  The most common exclusions are armaments and tobacco – which typically sit alongside a range of environmental and social exclusions or positive criteria. Strategies vary.  Some funds exclude more than others. Fund strategies are often complemented by responsible ownership (stewardship) activity.
  • Faith Based funds invest in line with specific religious principles (e.g. Shariah Law)

Strategies that significantly integrate ‘issues’ – but may invest widely across most sectors and/or rely substantially on stewardship activity:

  • Sustainability Tilted funds integrate (environmental and social) sustainability considerations into their investment processes favouring companies and typically aim to be ‘overweight’ in companies the managers believe have higher standards and ‘underweight’ (invest less in) companies with lower standards.   They may also have ‘ethical’ exclusion criteria and encourage positive change through stewardship activity.
  • ESG Plus  Funds combine environmental, social and governance risk mitigation strategies alongside other strategies which demonstrate the  fund is intended for clients with an interest in ESG issues.  The additional activity may be extensive responsible ownership activity and/or exclusion criteria. Strategies vary. See fund entries for further information.

Limited avoidance

  • Limited Exclusions is our classification for funds that exclude only a very small proportion of an index or allowable universe – and invest otherwise in a ‘conventional’ fashion.  Some funds exclude companies with the worst possible ESG scores, others may avoid a single industry eg tobacco or cluster munitions manufacturers.  These funds are significantly different from other SRI Styles as they have a very ‘limited’ impact on stock selection.

Fund Manager company listings

  • Responsible Ownership entries on Fund EcoMarket refer to company wide strategies – listing individual fund management companies by name. These listings are not complete.  For information on ‘responsible ownership’ (Stewardship/voting/engagement) activity that applies to individual funds see the ‘Corporate Activity’ filter field within each fund entry. Responsible ownership activity is often integral to fund strategies as many fund managers aim to encourage to raise their standards, however practices vary.

Additional SRI Styles classifications

The following are used for a small number of funds with the aim of reducing the risk of misleading users.  These are not reflected in our  StyleFinder fact find tool – the aim of which is to simplify the advice process.

  • ‘Other’ is used to flag funds that have a policy or strategy that is aligned to the issues covered by sustainable and/or ethical funds but is substantially different from other funds (e.g. single/niche issue).
  • ‘Unclassified’ funds that we have considered but are not confident are intended for clients with a keen interest in ESG, sustainability or ethical issues.
  • ‘Pending’ indicates funds that are not yet classified.

Fund Strategies vary, sometimes significantly.  Please see individual fund entries for fund specific information.

Fund EcoMarket listings

The Fund EcoMarket database lists all of the regulated, retail, onshore funds (plus a few related entries) that we are aware of.  The listing is therefore (as far as we are aware) ‘whole of market’ for these groups.  A listing on this database does not represent any form of endorsement or indication of quality.

Fund EcoMarket lists all options (that we are aware of) which are marketed as having relevant strategies.  It does not list specialist options such as unlisted funds or individual share or bond issues.

Please contact us if you have found any omissions or would like to request we alter any of the information we hold.

Within each style there are significant differences in strategy.  There are also areas of cross over between the styles.  Our aim is for the Styles to highlight the core issues funds consider (these are explained further in the ‘Policies, Issues and Themes’ filter option. To understand how fund managers deal with the issues, please use the ‘Approaches and Application’ filter.  Please read fund manager supplied text and links in the ‘More Info’ area for further information.

 

This service is provided for information purposes only.  Please speak with a qualified financial adviser for further information.

We do not deal directly with investors and are not authorised to offer advice.

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