Investors snap up sustainable funds as UK heatwaves continue

'This year has made a lot more people think about climate change'

Sales of renewable energy and impact funds are climbing, Hargreaves Lansdown reports, with the recent heatwave no doubt focusing investors’ minds on the reality of climate change.

The fund supermarket said the top 20 monthly best-selling funds have featured global and tech funds for many years, but now regularly include ESG and responsible investment funds.  

Among the top 10 responsible investment fund buys on Hargreaves Lansdown’s platform are Aegon Ethical Equity, Baillie Gifford Positive Change and Fundsmith Sustainable Equity. Index tracker Legal & General Future World ESG Developed index also features, along with two regional funds from Stewart Investors.  

“As temperatures have risen over the past six weeks, across the responsible investing universe of impact, ESG, ethical and sustainable funds, two of the most popular funds are those that invest in clean energy,” said HL’s head of investment analysis and research Emma Wall.

“These are providing essential investment to wean the world off fossil fuels and tackle the climate crisis.”

Over the past couple of years, Investment Association figures have shown responsible investment funds climb from being niche players to the most popular in terms of flows from retail investors, she added.

Morningstar also said it had seen climate change-themed funds remain popular in June.

Hortense Bioy, global director of sustainable research at Morningstar and ESG Clarity Committee member, noted that, last month, four of the top 10 best-selling sustainable funds in Europe were funds with a climate flavour.

These included iShares € Corp Bond ESG Paris-Aligned Climate ETF and Amundi IS MSCI World SRI Paris-Aligned Benchmark.

“This year has made a lot more people think about climate change, with first the energy crisis exacerbated by Russia’s invasion of Ukraine and now record high temperatures across Western Europe,” said Bioy.

“There is no doubt that climate change will increasingly become a lens through which investors will make investment decisions.”

Hargreaves Lansdown Top 10 Responsible Investment Funds
(Number of Buys, Alphabetical)
Aegon Ethical Equity Fund
Baillie Gifford Positive Change
EdenTree Responsible and Sustainable Managed Inc
Fidelity Sustainable MoneyBuilder Income
Fundsmith Sustainable Equity
Guinness Sustainable Energy
Legal & General Future World ESG Developed Index
Stewart Inv Asia Pacific Leaders Sustainability
Stewart Inv Indian Subcontinent Sustainability
VT Gravis Clean Energy Income
Source: Hargreaves Lansdown, as at 22 July 2022