Co-op launches a new fund to invest in global change
Sunday 26 July 2009
Investing in the growth of under-developed countries is no longer simply an ethical issue. It's an investment theme that's set to hit the mainstream, according to Co-operative Investments. The company is backing its hunch with the launch of a fund tomorrow which will give people the opportunity to profit from fundamental global changes, such as ageing populations and climate change.
Zack Hocking, the head of investments at Co-operative Investments, says: "The world is changing and it is throwing up highly attractive opportunities for long-term investors. The need to tackle ageing populations, climate change and global power shortage will see significant investment in those areas in coming years."
The Co-op's new Sustainable Diversified Trust will invest in companies that are well positioned to benefit from addressing these issues, says Mr Hocking. "We believe this is a good choice for investors with a cautious attitude to risk who want to invest for the medium or long-term."
The fund will be an actively managed multi-asset fund that aims to offer long-term capital growth. It will hold a mix of equities, bonds, cash and property, but will not invest in firms involved in armaments, tobacco, mining or animal testing for cosmetic purposes.
To encourage new investors, anyone investing more than £10,000 in the fund before 28 August will get a 2 per cent discount on the initial charge, usually 5 per cent. But is it a wise move? Investment analyst Mark Dampier of Hargreaves Lansdown has mixed feelings. "I like the fact that it's not an ethical fund, which can get too narrowly focused," he says. "It's likely that man-made climate change is going to be an investment theme for the next couple of decades and this fund is reasonably well-placed to play to the theme.
"However, it is likely to be volatile in the short-term and if you already have a portfolio of trusts it's likely that other fund managers will also be looking at the climate-change theme, which means investors could benefit without going into a specific trust like this. I like the themes, although many of them are present in the already established JM Finn Global Opportunities Fund."
Brian Dennehy of Kent advisers Dennehy Weller & Co says the fund has confusing aims: "It identifies a range of themes which must inevitably be met by an equity exposure, but says it's a cautious managed fund and low risk, which doesn't really add up. It looks like a marketing-led new launch and I'd suggest anyone wanting exposure to emerging global trends try established funds like M&G Global Basics."
Martin Bamford of financial planners Informed Choice says the investment theme is interesting, but he is unsure how successfully it will play as a short or medium-term opportunity. "Ethical and socially responsible investment will become conventional investments once the world faces up to future challenges," he says. "The questions that remain are how long will this shift in attitudes take, and how volatile will such a strategy be in the short to medium term? But there could be some good long-term opportunities from this fund."
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