The Virgin climate change fund should not be regarded a typical “green” climate change fund.
It does not screen negatively, does not only invest in clean tech and alternative energies and claims to be of lower volatility.
It works on a simple concept – a basic screen that filters companies with higher than average carbon footprints. The remaining firms with lower carbon will then be analysed for investment opportunities. The strategy works on three tenets – the fund is invested into anywhere from 75-100 per cent in lighter footprint, it can have up to 15 per cent in climate change solution adopters and up to 10 per cent in providers of climate change solutions.
The biggest drawback of the fund is its exorbitant cost structure. Virgin has drafted in GLG – the renowned hedge fund manager. It has shown some good performance operating similar strategy in the US investing in European companies but the expertise comes at a premium – effectively hedge fund charges. For its service, it charges an AMC of 1.75 per cent and a 20 per cent performance fee if it they beats two yardsticks – the Bank of England base rate and its own highwater mark – the unit price at the start of six months. Darius McDermott is managing director of Chelsea Financial Services