Public awareness and profit have led to ethical funds growing in popularity, with those under management breaking through the £5 billion barrier in January, an increase of almost a third in the last year, according to new figures released by the Investment Management Association.
Traditionally a niche market for those who believe in ethical investment
, ethical funds are becoming increasingly popular as a growing number of people realise that they hold financial potential in addition to global-friendly benefits.
Due to a rise in awareness of the various advantages of ethical funds, they now have a total of £5.6 billion under management within 50 funds, an increase of 32% compared to £4.36 billion on the same quarter in 2006.
This rise helps to counteract the limits placed upon the funds’ profitability as a result of restrictions on what sectors they can invest in that do not meet ethical standards, causing ethical investors to miss good returns from strong market trends.
Ethical funds still make up a small portion of total investment funds which stand at £463 billion, but it still shows a considerable growth; for example, the Cooperative Insurance Sustainable leaders fund topped the UK all-companies chart earlier this year, marking the first time an ethical company has done so, coming first out of 293 other funds.
Sheila Nicoll, Deputy Chief Executive of the IMA commented: “Against a background of improved total net retail sales this quarter compared to last quarter, net retail sales of funds of funds have also picked up. Net retail sales of ethical funds have seen large increases every quarter for the last year, with sales in this quarter alone surpassing those for each of the last four years.”
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