How to make money and save the world

Now you can be green and make a guilt-free profit. Terry Slavin reports

It's not easy being green. Tessa Tennant, who heads one of the City's most highly regarded "green" investment teams, believes that only by offering investors an attractive income can "green" finance tap more of its huge potential market.

Ms Tennant and her team, now at NPI after the insurer bought them out from Jupiter Tyndall last year, have just launched a new unit trust that concentrates on generating income - quite a departure in a market that is overwhelmingly geared to smaller companies offering capital growth. NPI's new fund aims to yield a conservative 4.5 per cent initially after management charges - the highest income of any ethical or ecology fund.

Lee Coates, of the Cheltenham-based Ethical Investors Group, says income funds will be welcomed by his clients, who are not the loony-fringe investors they are often portrayed as. "Having income funds available will allow us to do a lot more business."

According to Micropal, which monitors unit trust performance, there is little difference in performance between socially responsible unit and investment trusts and the market as a whole. In the year to 1 August, ethical and ecology trusts underperformed their sector averages by 0.5 per cent. Over five years, however, they outperformed by more than 1 per cent.

But Patrick Meehan of Holden Meehan says that, of 30 socially responsible unit trusts, only two - from Friends Provident and Henderson Touche Remnant, which launched its first "green" fund in February - offer a "reasonable" yield - 3.6 per cent and 2.8 per cent respectively.

Funds also have to decide whether they are committed primarily to ethical principles or to environmental issues. Where Friends Provident's pounds 55m income fund takes a conservative approach to ethical criteria, NPI's income fund will venture where few ethical funds have gone successfully before - into large companies that may be less than ethically pure but are making strides on the environment.

Where NPI's Global Care ecology fund had some of the strictest ethical rules, and would not invest in BT, for example, because the company sells communications equipment to the military, in NPI's income fund BT's strong record in environmental accounting overrides any ethical drawback.

Jupiter Tyndall, whose Ecology Fund invests in companies that are "environmentally proactive", will take a less rigorous approach to firms' environmental records with the ethical income fund it intends to launch this autumn.

Fund manager Simon Baker says the fund, which is still in the planning stage and does not yet have approval from the Securities and Investments Board, will aim for a high yield of 7 per cent, with between 25 and 50 per cent of the portfolio invested in convertible bonds.

Like NPI's income fund, Jupiter's new fund will invest in BT, but not because of the company's environmental record. For Jupiter, the fact that less than 1 per cent of BT's turnover is military-related allows it to pass its ethical screens.

These new kids on the block have forced Friends Provident to take another look at its income fund. Like NPI, which will deduct its 1.5 per cent management fee from the income fund's share capital rather than from its income - allowing it to pay higher yields - Friends Provident is moving to take part of its 1.125 per cent management charge from capital, following a change in unit trust regulations last year.

But Stuart Dyer, director of marketing and sales at Friends Provident, says that he does not expect the yield, currently 3.5 per cent before management fees, to increase above 4 per cent after the change in September or October.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

Money Insider: How to make credit cards pay

Andrew Hagger reveals how to get the most from your plastic

Questions of Cash: My 'perfect travel companion' from the Post Office was a waste of money

One reader purchased the Post Office Travel Money Plus Card for a motoring holiday but discovered it can't be used at self-service petrol stations or autoroute toll booths

Continuing low interest rates are encouraging more people to switch to interest-only mortgages

Interest-only mortgages return to give more flexibility to borrowers

The credit crunch put a temporary end to these once-popular mortgages. But lenders are waking up to rising demand and relaxing their rules

EU to scrap roaming charges in 2017: European Commission under fire for taking so long to act

UK consumer groups complained that British holidaymakers face another two years of mobile phone misery before the law comes into effect

On the money: Yorkshire building society has demonstrated that it is taking the P2P industry seriously

Is peer-to-peer lending a risk worth taking?

The P2P industry must do more to shake off an unjustified image of being too complex and risky for the everyday saver, says Andrew Hagger

Generating grievances: Scottish Power's Longannet station in Fife

Questions of Cash: Scottish Power says it's sorry - again and again

Six of the energy company's customer have cause to blow a fuse this week

Will Patisserie Valerie be the portfolio's sweet spot?

Derek Pain: 'Patience is a virtue but maybe I should cut and run'

Derek's portfolio is currently suffering because of his failure to be more ruthless

There are now more than three million people in “severe problem debt”

Debt managers are misleading vulnerable people, warns watchdog

One debtor was given a repayment plan that would have taken 125 years to repay

Challengers are smashing the traditional high street banks when it comes to offering decent savings rates

Ignore the new breed of savings institutions and you'll lose interest

NatWest has ripped up its pledge to never be the last bank in town

NatWest pledged five years ago it wouldn't close the last bank in town. Now villagers have been told the branch shuts in September

When the last bank closes, local shops quickly go out of business

Under new state pension rules we will all be much worse off

Why did no one notice? The Government hides behind complexity, says Neasa MacErlean

Bogus Islington landlord scams public for £20,000 in fake deposits

It’s not just Islington... Simon Read warns renters and landlords about a nationwide fraud operation

Questions of Cash: The paperwork wasn't right so I was left high and dry with a broken washing machine

A reader encountered a problem with a Currys washer/dryer care plan

Borrowers should steer clear of established providers to get the best rates

Interest rates have never been cheaper if you want a five-figure personal loan but for lower-value loans it's a very different picture

Personal banking: Banking chiefs at NatWest and RBS insist that they are over the worst of the technical issues but customers are still complaining of payment issues. NatWest has waived overdraft fees and told customers they can withdraw £100 more than their limit over the next few days

People’s bank in crisis again: What should you do about the NatWest/RBS meltdown?

Thousands still waiting for payments to go through

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

    Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

    Briton pumped up for dream meeting with world No 1
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

    Damien Martyn: 'England are fired up again, just like in 2005...'

    Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test