The amount of investor money in ethical funds has grown by almost a third in the past year, according to the Investment Management Association.
Green funds had a total of £5.6bn in assets under management at the end of June compared with £4.26bn at the same time last year.
It has been a strong year for awareness of ethical funds and they broke through the £5bn barrier for the first time in January.
An ethical fund topped the UK all companies sector for the first time this year when the £171m Co-op-erative Insurance Sustainable leaders fund led the way on a 12-month basis.
But BestInvest head of communications Justin Modray is sceptical about the motives behind the surge in ethical investing. He says: “The ethical growth is down to greed more than being environmentally aware and will continue to perform upon that basis. If the FTSE 100 performs, ethical funds will find it difficult. It has not performed recently and, as a result, ethical funds have good track records.”
IMA figures also show assets under management in funds of funds reached £33bn at the end of June, a £3bn rise on the previous quarter and an increase of 30 per cent from 12 months ago. Balanced funds saw the biggest of inflows at 69 per cent.