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Green shoots

Julian Marr Marr’s Markets

Rejoice – the recession is over for sure. How do I know? I know because the one incontrovertible indicator of indisputable happy days has just clicked into place – and it has nothing to do with interest rates, inflation, house prices, unemployment or anything else that keeps the economists off the streets.

I am, of course, referring to the rise of the socially responsible investment fund. Again. Not in the sense of an increase in performance because as we all know – or at least as we are all told every few years by the various champions of SRI – green and ethical funds perform at least as well as other investments.

No, I mean in the sense of an increase in profile. For not only do we have a new report – Responsible investment and wealth management – opportunities for the future – written by Eiris and published in association with Wealth-Briefing and Kleinwort “We’re Still Here” Benson, we also stand literally days away from National Ethical Investment Week, which starts on November 8. Yes, it is exciting.

Why is this such a positive indicator? Because SRI only tends to thrive as an investment concept in boom times – presumably because, when things are going badly, investors prefer to look out for Number One. But when things are going well, why not feel better about oneself by throwing a little towards an ethical or green investment?

Ah, I see the flaw in my theory – the report and a whole designated week are not evidence of an upturn in SRI but rather of a hope among professional socially responsible investors that that upturn is not too far away. Apologies – maybe the recession is not as conclusively over as I may have led you to believe.

But maybe also the SRI mob has a point. Maybe – this time – it can break into the mainstream of investment just like it did not in the mid-to-late 1990s and – oh, when was the last big push? – call it 2003.

After all, you would have to think the public mood is favourable – certainly in terms of increasing environmental awareness. And, personally, I have always liked the argument that companies that think hard about the way they do business – as more ethically and green-oriented organis-ations naturally do – are likely to make good investments.

According to that report, high-net-worth types are now more aware than ever of social, environmental and governance issues and how they might relate to their investments while 90 per cent of wealth managers responding to the survey reckon their SRI portfolios have performed the same or better than their other portfolios (there – didn’t I tell you?).

“It is our job as wealth management professionals to be more proactive in the education of both private clients and charities in terms of responsible investment capabilities,” thunders Guy McGlashan, head of private wealth management services at Kleinwort Benson.

“The financial landscape has changed immensely since Lehman’s demise and wealth managers have a responsibility to understand not only a client’s investment outlook but also their philanthropic drivers. We believe wealth management tools will evolve as responsible investment takes on a significantly greater role in mitigating risk and delivering investment goals.”

Well, you never know and this could be third – in my experience – time lucky but SRI is going to need more buy-in from the broader investment sector. Visit Trustnet and only 60 funds carry the site’s “Ethical/sustainable” tag, with only a third of them residing in the UK all companies sector.
What’s more, how involved are the biggest retail players? Call the top six Invesco Perpetual, Jupiter, M&G, Henderson New Star, Fidelity and Artemis and while I am sure they all have lovely ways of investing ethically, only Jupiter and Henderson are represented among Trustnet’s list of 60.

I am sorry to sound doubtful but I have been writing about SRI since the days when it was ethical investment and I could rejoice in running a headline such as “Opportunity knocks with a greeny hue” and still be relatively certain that readers would get the reference.

Maybe I should be ashamed of myself for this scepticism although I suspect I am not alone. Still, at least there is the traditional way to feel better. You can invest in the funds and I can write about them.

Julian Marr is editorial director of marketing-hub.co.uk

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