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Ethical investment benefitting from record oil prices

08 July 2008 / by Rachael Stiles
The rising cost of filling the tank is encouraging growing numbers of people to opt for more environmentally-friendly modes of transport which is in turn benefitting ethical investment funds.

Mike Fox, manager of the CIS Sustainable Trust Fund at Co-operative Investments, believes that the current record oil prices are helping investments in public transport companies to produce higher returns.

If the proposed congestion charges for other British cities outside London come into action, then UK transport operators will benefit from significant new investment in public transport.

The outlook for overseas investment is also compelling, the Co-op says, because of the existing reputation of UK operators improving standards of public transport abroad.

"Commuters now have more than just environmental reasons to leave the car at home." said Mr Fox. "The rising cost of filling up at the pumps is leading increasing number of people to choose public transport to save money and it is good news for providers.

"There are also some excellent opportunities for bus and train providers to grow their businesses as other countries follow the UK's lead by opening up new overseas franchises for the first time."

Mr Fox believes that two companies which are well placed for growth are Arriva and National Express. Arriva has spent 10 years growing the business and has delivered returns of 32.1 per cent over the last three years. National Express has returned 17.2 per cent over the same period, and is now the second largest operator of school buses in America.

As a reflection of ethical investments competing strongly with other markets, the CIS Sustainable Leaders Trust provided returns of 43.80 per cent in the last three years, way above that achieved by the UK All Companies Sector which reached 33.25, and the FTSE All-Share Index which returned 37.07 per cent.

The Fund only invests in companies which are beneficial to the environment and human welfare; public transport, therefore, is an important focus for the fund as it helps to keep cars off the roads and reduce carbon emissions.

© Fair Investment Company Ltd