Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

THE pressure for us all to find more sustainable ways to live in the future will lead to winners - and losers - among companies. 

That’s the assumption behind sustainable investing - the approach that favours businesses with models that can be maintained from an environmental and social point of view, and which shuns those that risk doing harm to their customers and the world around them.  

Sustainable investing is of increasing interest from those who want their money to do no harm in the world, but it is also applied by those who believe it makes financial sense for companies to operate in ways that can be grown and sustained into the future. The alternative, they believe, is companies relying on outmoded methods or scarce resources that will, sooner or later, face serious obstacles. 

Our Select 50 is a list of funds hand-picked by experts who analyse funds based on their ability to outperform their chosen segment of the market in the future, although investments can of course go down as well. Three of their current selections are also run according to sustainable principles. 

1. Brown Advisory US Sustainable Growth Fund 

Brown Advisory has sustainability in its bones. The company is majority employee-owned, and thereby run with the future in mind, not just the here and now. The Brown Advisory US Sustainability Growth fund uses the same approach to look for American companies with a durable competitive advantage.  

It focuses on large companies that have steady growth which can be sustained, rather than rapid growth that will burn out. 

The fund looks for businesses that have advantages, such as established brands or a unique product or technology that enables them to have higher-than-average margins over the long-term. Its top 10 holdings include big names like Nvidia, Microsoft and AmazonLearn more about Nvidia here.

This fund is appropriate for investors looking to maintain a holding over a period of ten years or more. This fund may form part of the riskier allocations in a diversified portfolio. Its ongoing charge is 0.72%.  

2. Stewart Investors Asia Pacific Leaders Sustainability Fund

This fund invests across Asia. Its current top 10 holdings are in India, Japan, Singapore and Australia. According to the manager, a leading company is one with a resilient balance sheet, good franchises, a strong culture and a focus on sustainability. 

Typically, the fund targets companies that are of high-quality which therefore tend to trade on higher valuations. But it also blends a value style approach to look for companies with a depressed share price, in the expectation that they’ll recover.  

This fund is appropriate for investors looking to invest for a period of ten years or more. Its ongoing charge is 0.84%.  

3. iShares Environment & Low Carbon Tilt Real Estate Index  

This commercial property-focussed fund changed its investment strategy in 2022 to include sustainability considerations in its methodology in response to growing interest from investors in environmental, social and governance (ESG) factors.  

This is a passively managed fund that tracks the FTSE Developed Green Low Carbon Target Index. It invests primarily globally listed, property companies. Underlying properties could be anything from offices and shopping centres to warehouses of medical facilities. 

Taking a sustainable approach to commercial property investing makes sense when you consider the increasing pressure that businesses are under to reduce their carbon footprint. In that context, demand for business premises that are energy efficient and in other ways sustainable should grow.   

Another advantage of this fund is that it offers a reliable rental income and dividend yield over time - currently around 3% - so if you’re looking to invest for income, this may be a good addition to your portfolio. In terms of risk, the fund is on the higher risk side of a portfolio. The fund’s ongoing cost is 0.17%. 

Learn about our Sustainable Investment Finder  

Another way you can browse funds that consider sustainability is through our Sustainable Investment Finder.  

You can filter a catalogue of sustainable investments by second different categories. It also includes advanced filters that allow you to either include, exclude, or avoid issues, industries and areas of interest. 

For example, you can filter for funds that include a climate change/greenhouse gas emissions policy. You can also look at funds that avoid coal, oil and/or gas companies. 

We know investment returns and costs are important too. That’s why the tool allows you to view a fund’s performance, its yield, Morningstar ratings and its ongoing charges. 

It’s a quick and easy way to browse through our options and ultimately, find what’s right for you. 

What is sustainable investing? 

If you feel unsure about what sustainable investing is, check out this short video that explains the basics in under 5 minutes. In conversation with Tom Stevenson, Investment Director.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. An Investment Manager's focus on securities of companies which maintain strong environmental, social and governance ("ESG") credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security's ESG credentials can change over time. Investments in emerging markets can be more volatile than other more developed markets. Funds in the property sector invest in property and land. These can be difficult to sell so you may not be able to sell/cash in this investment when you want to. There may be a delay in acting on your instructions to sell your investment. The value of property is generally a matter of a valuer's opinion rather than fact. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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