LONDON, 22 NOVEMBER 2018: A US fund Brown Advisory US Sustainable Growth has been added to the FE Invest Responsibly Managed Approved List for the first time at the latest rebalance. In total, seven funds have been added and two removed.
The list aims to support financial advisers in meeting the surge in demand from clients for sustainable and ethical investments. Eligible funds are shortlisted by the same methodology[1] used to create the FE Invest Approved List ꟷ based on FE’s extensive ratings, comprehensive fund data and due diligence from FE’s team of analysts.
Brown Advisory US Sustainable Growth is the first fund from the IA North America sector to make the list, owing to its negative screen and performance.
FE fund analyst, Sophie Meatyard explains: “There are not many North American responsibly managed funds available, driven largely by low demand from US investors versus investors in Europe, where responsible investing is more established. Even some of the largest US asset management houses are yet to launch funds in this space.
“The Brown Advisory fund is the first that has met our criteria. The fund uses a negative screen, which excludes alcohol, tobacco and gambling, whilst also avoiding any companies that defy the United Nations Global Compact Principles. On top of that, Brown Advisory is a specialist in US stocks and their track record shows this.”
Full list of funds in and out at the latest rebalance:
Commenting on the UK All Companies funds added, FE research manager, Charles Younes said: “F&C Responsible UK Equity Growth is one of the longest-running in the ethical investing sphere and has been run by manager Catherine Stanley since 2009. The fund has a strong track record as evidenced by it having the second highest, four FE Crown Rating.
“The Liontrust fund’s managers have proven that they can consistently add value to investors over and above the market. Its maximum five FE Crown Rating is also evidence of its success.”
On the addition of two IA Global funds added ꟷ Kames Global Sustainable Equity and F&C Responsible Global Equity ꟷ Meatyard explains: “Although it only has a short history, the Kames fund already has an impressive track record. The F&C fund’s performance has been driven by the team’s stock selection over the long-term with the manager’s high conviction names heavily contributing to positive performance.”
Concerns over stock picking have led to the removal of EdenTree Amity UK and Quilter Investors Ethical Equity. Meatyard explains: “The EdenTree fund has underperformed its peers in recent years, a move that we attribute to poor stock picking from the management team. There is also some uncertainty regarding the future of its lead manager, Sue Round, so we feel it is prudent to sell out of the fund.
“The quality of stock picking within the Quilter fund has fallen and we have found better alternatives in the global equity space. We do not see any catalyst for this improving at present so are no longer happy with the risks that the fund exposes investors to.”
Younes says: “The industry has seen a significant influx of investment into sustainable funds in recent years, with the UK government calling for such vehicles to be made more widely available, as well as a groundswell of interest from the public. We believe appetite for responsible investments will soar in the next decade.
“Despite a difficult few months for ethical and sustainable investors, we remain convinced of the long-term potential for this form of investing.”
[1] See notes to editors
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NOTES TO EDITORS
Methodology
To be considered for the FE Invest Responsibly Managed Approved List, a fund must at the very least implement a negative screen and be available for sale in the UK. FE data and ratings are used to identify a shortlist of top performing funds. Qualitative selection criteria are then applied to produce the final recommended list. FE accepts no payment from any of the fund managers for their participation in the ratings or review process, or for their inclusion in the shortlist.
About FE
FE is a leading provider of data, software and performance analytics to the financial services industry. FE’s products and services are designed to interpret and analyse data, helping financial advisers and investors stay well informed and ultimately make sound investment decisions. FE also provides tools and software for fund managers and other financial services firms, including products to assist with fund reporting and analysis as well as fund marketing and presentation materials. FE has offices in the UK, Europe and across Asia Pacific. Its clients include life and pension providers, asset managers, financial advisers and networks, wrap platforms, fund supermarkets, software houses, and financial portals.
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