Fund manager Duncan Carmichael-Jack of Vestra Wealth, the investment adviser appointed by Way, will not select generalist environmental or ethical funds that invest across themes and sectors. Instead, he will make his own asset allocation decisions within the environmental sector.
At launch, the fund will contain 10 funds including Impax environmental markets, Pictet (Lux) water and Guinness alternative energy. The majority of the funds in the portfolio will have a 10 per cent weighting, but the Impax and SAM sustainable water funds are bigger at 15 per cent. The Jupiter ecology and SAM smart materials funds each comprise 5 per cent of the initial portfolio.
Way chose a fund of funds structure to reduce the risks of investing directly in firms that are tackling and responding to environmental issues. It says a combination of climate change and global population growth will put pressure on the finite supply of natural resources, which will create investment opportunities. But investing directly in companies that develop and market solutions to climate change can be volatile and Way believes a fund of funds structure can diversify this risk.
Way Fund Managers sales and marketing director Eddie Gorman says that each area in the environmental sector goes through its own investment cycle, so at any one time, it might not be good to invest in, for example, a timber fund.
He says: “The Investment opportunities exist because we’ve got to do something about climate change. If you make a direct holding in something that is developing, it will prove too great a risk from an investor viewpoint. A lot of areas are innovative and risk control is important.”