Advisers have slammed Virgin Money’s new climate change fund, claiming it has an excessive charging structure and can easily invest in companies that damage the environment.
Hargreaves Lansdown head of SRI Alex Davies says that the biggest problem is the 20 per cent performance fee for beating the Bank of England base rate, which he sees as a straightforward goal for outsourced US hedge fund firm GLG Partners.
He says: “This goal is hardly demanding in most markets. You also have to look at the list of possible stock options in the GLG environment fund – a similar vehicle already run by the firm – with Renault, Xstrata and BG Group included. Car, mining and gas companies are not exactly three traits of climate change.”
Seventy-five per cent of the fund targets companies with lighter than average environmental footprints for their sector. Virgin Money head of PR Scott Mowbray says: “This fund is suitable for European and ethically friendly investors as we do not believe people want to invest ethically for a slap on the back but to make money. As for the fee, we chose BoE base rate as it offers a positive return in all markets as opposed to getting fees from a negative index that will see investors lose money.”