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.

David Moyes and Louis van Gaal
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
Have you tried new the Independent Digital Edition apps?
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Finacial products from our partners
Property search

Scottish independence: How will kilt-edged stocks fare?

Scottish companies were caned when the separatists surged in the polls. Is this the future, asks Simon Read, and would they be any better together?

Two million first-time buyers are locked out

The drought in lending to people with low deposits has created legions of frustrated buyers, writes Emma Lunn

Leaving money to charity in your will could help reduce the tax bill for your loved ones

Next week has been designated "remember a charity in your will week", to put the focus squarely on the subject
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    COO / Chief Operating Officer

    £80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments