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Co-op ethical fund is the first to head all-company sector

An ethical fund has topped the UK all companies sector for the first time, as Investment Management Association statistics show the ethical investment market is set to break through the £5bn barrier.

The £146m Co-operative Insurance Sustainable Leaders fund is first out of 293 funds on a 12-month basis, returning 29.8 per cent compared with an average of 13.9 per cent.

Managed by Mike Fox, the fund, which launched in 1990, has grown by 92.6 per cent over three years against an average of 62.3 per cent.

Ethical funds have traditionally had a reputation for being niche investments rather than strong performers, as they are restricted in terms of what sectors they can invest in, therefore missing good returns from strong market trends on a cyclical basis.

However, funds such as F&C’s Stewardship have grown in popularity and 10 ethical investment trusts were launched in 2006.

IMA statistics reflect the sector’s popularity as funds under management in the final quarter of last year reached £4.9bn – a rise of 24 per cent on the same quarter in 2005. Net inflows were £136.5m, the highest since 2002.

Torquil Clark investments director Philippa Gee says: “I am glad that people have finally realised that you do not have to give up performance to invest ethically.

“Some sectors like tobacco and gaming have performed badly while others like global climate change are anything but cyclical and will continue to widen opportunities.”

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