I like these 2 ‘sustainable’ investment funds that are smashing the FTSE 100

Interested in sustainable investing? These two funds that are outperforming the FTSE 100 (INDEXFTSE: UKX) could be a good place to start, says Edward Sheldon.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Sustainable investing has become popular in recent years as the world has become more environmentally aware. Often referred to as socially responsible investing (SRI), or green investing, sustainable investing seeks to generate a financial return while also considering environmental, social, and governance (ESG) factors.

In the past, investing on a sustainable basis often meant sacrificing returns as plenty of these funds underperformed the market. However, in recent years, many have delivered excellent returns for investors. Here’s a look at two sustainable funds that have smashed the FTSE 100 over the last five years.

Liontrust Sustainable Future Global Growth

This Liontrust Sustainable Future Global Growth fund is a fund with a global focus, investing in a broad range of companies from around the world. However, it only invests in companies that meet the team’s rules for environmental and social responsibility. Liontrust’s investment process seeks to identify companies that not only have strong growth prospects, but also offer products or services that make a positive contribution to society. 

In recent years, this fund’s performance has been excellent. Over one year, it’s returned 17.4%, while over three and five years, it’s returned 58.9% and 103.9%, respectively. By contrast, the FTSE 100 has returned just 2.3% over the last year, and 25.5% and 33.1% over three and five years.

One of the reasons this fund has performed so well recently is that it has considerable exposure to the technology sector. However, the fund is also well diversified across many different sectors. Some of its top holdings include Alphabet (the parent company of Google), Autodesk, which makes architecture and construction software, and Ecolab, which offers water, hygiene and energy technologies.

Overall, I think this fund could be a good portfolio addition for those looking to invest sustainably. Fees are 0.93% per year through Hargreaves Lansdown.

BMO Sustainable Opportunities Global Equity

The BMO Sustainable Opportunities Global Equity fund is another globally-focused fund that has performed well in recent years. It’s based on positive, sustainable investment themes, including ESG opportunities. However, it’s not limited to such themes and isn’t subject to negative screening or portfolio exclusions, so it may not be as focused on sustainability as some other funds in the sector. Its goal is to achieve medium- to long-term capital growth, with some income.

Over a one-year investment horizon, the BMO Sustainable Opportunities Global Equity fund has returned 12.5%, while over three and five years, it’s returned 55.1% and 82.8%, respectively. Again, it’s outperformed the FTSE 100 by a wide margin due to its global focus and exposure to the US technology sector. There are plenty of interesting ‘green’ names in the portfolio, such as water technology group Xylem.

All in all, I see this fund as a solid pick in the sustainable sector. It’s also available on the Hargreaves Lansdown platform with an annual fee of 1.29%.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Alphabet. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

How much would I need to invest in income shares to earn £300 a month?

What kind of lump sum would be required to earn £300 a month by taking advantage of some of the…

Read more »

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »