Ethical unit trusts have passed the £2bn mark for funds under management, an increase of 35 per cent since last March.
Nine new funds have entered the market in the past year, bringing the total to 34 and confirming a steady upward trend in their popularity.
Investors can choose funds promoting their personal ethical objectives and excluding GM foods or arms companies to including companies focusing on health and safety or the environment.
The average ethical unit trust currently returns £2,361 on £1000 invested over 5 years, compared with the FTSE All Share which returned £2339. Over one year £1,000 invested ethically returns £1279 compared to £1.086 for the All Share.
Cooperative Insurance Services, which runs the ethical fund the CIS Environ Trust believes the success of ethical funds is linked directly to Government policy.
Press officer Russ Brady says: “The attractive capital returns of ethical unit trusts are intrinsically linked to a push by the Government to improve business ethics, as seen in the transparent charging structures of Stakeholder pensions.”