Three ways to make my portfolio more sustainable

It’s a nice feeling when you look at your investment portfolio and see that it has risen in value. It’s an even nicer feeling if you know that the funds you hold are investing in companies that have a good record on issues such as climate change or society.

Today, there are plenty of such sustainable funds out there, which look to do both – take a responsible approach to investing, while making you money. With a constantly expanding market of ESG funds – Environmental, Social, Governance it's never been easier to make your own portfolio that little bit more sustainable.

What makes a good ESG fund?

That is the million-dollar question! And it’s a difficult task to undertake. Looking for such a fund requires a lot of work, not only to understand if the fund has potential to deliver strong returns but also to make sure that the fund manager is adhering to their strict policy of responsibilities. And what makes one fund sustainable is different to what makes another one sustainable. For example, some managers focus on environmental issues, such as pollution and the use of plastic, whereas others focus on social issues such as diversity in the workplace and how employers treat their workforce.

3 ideas

We’ve done the hard work, so you don’t have to. If you are looking to add an ESG fund to your portfolio, here are three ideas that you may wish to consider.

Janus Henderson Global Sustainable Equity Fund

What makes this fund stand out is the robust process which determines which companies can and can’t make it into the portfolio. For every company they invest in, they ask themselves one simple question, “is the world a better place because of this company?” And how can they prove this?

Every year, the manager publishes a report called the ‘Annual Sustainability Report’, which details the impact the fund has had, including statistics such as the amount of renewable energy generated, the amount of CO2 emissions avoided, and the number of tonnes of waste recycled, for every £1 invested. It really does show you how your investment has made a difference.

BlackRock Sustainable Energy Fund

The aim of the fund is to invest in companies that are engaged in alternative energy and energy technologies. This includes areas such as alternative fuels, energy efficiency, and renewable energy technology, while avoiding areas such as oil and gas exploration/production and coal.

We like this fund because it is managed by a well-resourced and experienced team with one of the longest track records investing in the new and sustainable energy theme. While we’ve seen many similar new funds launched over the last few years, as new teams enter this space, we place great emphasis on the well-resourced and experienced investment team dedicated entirely to idea generation for this fund.

Jupiter Ecology Fund

As one of the longest-running environmentally-focused investment funds, the Jupiter Ecology Fund was launched in 1988, when a focus on such areas was seen as very specialised and somewhat ‘unusual’. The fund’s investment approach has remained the same since day one – to identify long-term investment opportunities in companies that provide solutions to our environmental challenges. This fund invests across environmental themes that include renewable energy, pollution reduction, resource efficiency, water treatment and infrastructure, and waste recycling, as well as social themes such as access to healthcare and education.

While the market for ESG investing develops at a fast pace, these could be funds worth considering if you are thinking of ‘responsible investing’ for the first time. Each fund has the potential to making your investment portfolio a bit more sustainable, without sacrificing returns.

These three funds are part of the Barclays Funds List - a list of investment funds that we believe have built solid reputations and which our experts believe have the potential to generate consistent returns in the medium to long term (five years or more). Find out more information on these funds.

If you want to learn more about sustainable investing, visit our ‘What is ESG investing’ page.

To diversify your investment, you may like to consider our own Barclays Ready-Made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified one-stop solution for investors. Ready-Made Investments are not the only funds that we offer and they won’t be appropriate for everyone.

These are our current opinions but the future, as ever, is uncertain and outcomes may differ. Past performance of the fund and its manager are not a reliable indicator of their future performance.

We don’t offer personal investment advice so if you’re unsure you should seek that independently. Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.

Read the Assessment of Value report [PDF, 683KB] for funds run by Barclays.