Like many people Helen Speight has started to take more notice about where her money is invested.
She says: “I only have a modest amount of savings but I would like some of this money to be invested more sustainably, and helping companies that are trying to tackle climate change.”
Helen, who is in her late 30s and works as a part-time operations manager, has been investing for over 10 years.
“Initially I opened an ISA with my partner to help us get on the housing ladder. We bought our first home just over 10 years ago. It wasn’t easy, as this was just after the financial crash and you suddenly needed a very large deposit to qualify for a mortgage.”
The couple saved both in cash and via a Stocks and Shares Isa. “My partner works in the insurance industry so I think he’s a bit more clued up about finances and the stock market. There was the risk that the money we saved might fall over the shorter term, but we thought we thought this was a risk worth taking.”
In the end this risk paid off and they were able to buy their first flat. Since the couple have got married, had a son – who is now three years old – and have this year moved house again.
“During this period we haven’t had a lot of spare cash for savings, but we do try to invest a small amount each month into our Isa. It does build up over the longer term, and we’ve been able to use some of the proceeds towards our wedding and the recent house move.
“Both myself and my husband also have pensions through our work. We have also opened a Junior Isa for our son, though it’s mainly birthday and Christmas money from grandparents funding that at present.”
The couple hold a range of funds within their Isa. “Initially it was my husband who picked these funds, but I’ve selected a couple more recently. Thinking about investments for son made me do a bit more research into greener investments.I like the idea of my money working to build a better future for him.”
Two Green Funds
Helen has two main ‘green’ fund holdings to date. These are the L&G Future World ESG Developed Index fund and Pictet-Water.
L&G fund is a more general fund, which has exposure to a lot of companies that are reducing carbon emissions.
The other fund is more specialist, but has delivered very good returns. It actively invests in companies that are helping deliver more sustainable water solutions across the globe.
This L&G fund has a Morningstar Quantitative Rating (MQR) of Bronze and is a passive index tracking fund, so fees are relatively low, but rather than simply follow a main stock market index, L&G weights the investments to favour companies who are improving their environmental, social and governance (ESG) track record. The fund was only launched in 2019, but over the year to date it has delivered trailing returns of 14.1% according to Morningstar data.
Pictet-Water is a more specialist fund, but again has a global reach, investing in companies across operating in the water sectors. It has been a steady performer over the longer term, and has a 4-star rating from Morningstar, reflecting its strong performance relative to peers.
The fund also has a MQR Rating of Neutral, and over the last three years has delivered annualised trailing returns of 16.69%.
These have been the most recent additions to the couple’s Isa. Helen says: “We don’t have huge savings, so I also want to try and get a decent return on my money. But the ‘green’ funds we’ve invested in to date seem to have performed well. We have some older holdings too, that have delivered good returns. They may not have a ‘green’ badge but we think it makes sense to stick with them for now.”
Fundsmith Outperforms
The best performing fund has been FundSmith Equity. The fund has been one of the top performing – and most popular – funds in recent years, and has a 5-star rating from Morningstar, and a Gold Analyst Rating.
This global fund offers a “highly structured and disciplined investment approach” according to Morningstar analysts and has delivered consistently exceptional returns to investors in recent years.
Over the past three years, for example it has delivered annualised returns of 18.58% to investors. Its long-term track record is just as impressive, producing annualised returns of 15.52% over five years and 19% over 10 years.
The fund is run by the highly regarded manager Terry Smith whose investment philosophy is to buy and hold high-quality businesses that he hopes will continue to compound in value.
Helen says: “We don’t have a huge amount to invest so we want to maximise return. Investing in funds like this seems a good way to do this.”
She adds: “Theoretically the pensions are for our retirement, the Junior Isa will hopefully help with our son’s education - although all of that seems a very long way off! We have used the Isa for more medium term savings, be it house moves or wedding. I think it helps me to save if there is a goal in mind, though I’m looking to build up these savings again over the next few years.”
