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.

WHILE most investors will be able to see the financial return for their investment, it is relatively rare to be able to quantify its impact on the world around it. Would you feel differently about your savings if you knew that your £10,000 ISA investments had, for example, saved 11,000 litres of drinking water, a tonne of CO2 emissions, or prevented disease for up to eight people?1

Rosie Rankin, a specialist on the Positive Change Team at Baillie Gifford, admits that impact measurement is still imperfect, but they can give these indicators on the group’s Positive Change fund. The Impact Indicator gives metrics on carbon, health and social impact for different investment levels. This is a brave new frontier in investment, bringing a new transparency to how capital is invested.

The fund has consistently been one of the most popular on the Fidelity platform2, part of a new wave of funds that seek to go one step further than simply assessing companies on environmental, social or governance metrics, and instead actively looking at the impact of the underlying investments. These funds demand not just good intentions from their investee companies, but that they are demonstrably making the world a better place.

Rankin says that the fund seeks positive impact in four areas: social inclusion and education; environment and resource needs; healthcare and quality of life; and ‘bottom of the pyramid’ – action to help those at the bottom of the ladder. “We are looking for a small number of companies – around 35 – that have exceptional products that we believe are helping solve these challenges. We’re looking for positive impact in the years ahead, not just what a company is doing today.”

The tools for impact measurement are still in their infancy, but Baillie Gifford is working with companies to get more granular data on areas such as carbon emissions, patients treated or financial inclusion. “It’s not exact and companies report in different ways, but it’s getting better all the time,” she says. The data is overseen by KPMG and she believes this third party oversight is vital.

The portfolio is diverse, but bears all the hallmarks of Baillie Gifford’s high growth style that has worked so well on other popular funds such as Scottish Mortgage or Baillie Gifford American. The team is looking for companies that can double on a five-year view. The managers take a low turnover approach, investing in just a handful of new companies every year.

The largest holding is Moderna, well-known for its role in Covid-19 vaccine development. However, the mRNA technology that it has helped pioneer has far broader use in treating and preventing diseases not currently addressable. This sits alongside companies such as Deere, which makes precision agricultural equipment, or Umicore, a global leader in clean mobility materials and recycling.

The fund is now £3.1bn in size, having grown rapidly since its launch in 2017. It stands out from many other sustainable funds, with an eclectic portfolio that goes well beyond climate change in its scope and ambition.

More on Baillie Gifford Positive Change Fund

Source:

1  Baillie Gifford Impact Indicator, October 2021, based on a £10,000 investment
2  Fidelity International, October 2021

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. This fund invests in overseas markets and so the value of investments can be affected by changes in currency exchange rates. This fund invests in emerging markets which can be more volatile than other more developed markets. This fund invests in a relatively small number of companies and so may carry more risk than funds that are more diversified. The 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. 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. 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 a Fidelity adviser or an authorised financial adviser of your choice.

Share this article

Latest articles

Watch: Market News Update - 16 May 2022

In this week’s market update: another down week for shares; bond markets catc…


Tom Stevenson

Tom Stevenson

Fidelity International

Market news today - Contrarians sense a turning point

What’s driving your investments this week?


Tom Stevenson

Tom Stevenson

Fidelity International

How to turn a profit in the post-Covid market

A bigger state and rising inflation means it really may be different this time


Tom Stevenson

Tom Stevenson

Fidelity International