20 years of sustainable investing and what this tells us about the future - Flipbook - Page 3
20 years of the Sustainable Future Funds
Twenty years ago on 19 February 2001, the Sustainable Future (SF) Funds launched in the
UK and I was an assistant manager on the team led by Clare Brook. As still stands today, the
initial goal of the funds was to deliver strong returns by investing in sustainable companies.
In addition, the team committed to
engage with companies on behalf of
clients to encourage best practice on
environmental and social issues.
At the time, these were radical
notions. Most investors were certain
Peter Michaelis, Head of
that incorporating ‘goodness’ or
the Liontrust Sustainable
positive impact into investment was
Investment Team
a distraction at best and, at worst,
guaranteed to deliver worse returns. Equally, the prevailing mindset
remained in line with Milton Friedman’s dictum that the business of
business is business, meaning shareholders should only care about
profit maximisation and not worry about how it is achieved.
A quote from the launch of the first SF funds highlights how we were
looking to think differently:
‘We believe the companies and industries that will perform best in the
21st Century are precisely those that consider how their actions will
affect the world in 25 or 50 years’ time. We expect companies with
such vision to be best placed to seize the opportunities arising from
environmental, social and political changes. The widely held notion that
SRI necessarily produces inferior performance is wholly wrong: numerous
SRI funds have consistently outperformed their mainstream equivalents.
This is not an idealistic approach to investing: environmental and social
issues regularly affect stock prices with dramatic results.’ – Clare Brook,
Head of the Socially Responsible Investing (SRI) Team.
Our funds launched successfully and grew modestly, even as the
2001 tech bubble deflated. Early clients were those individuals and
institutions that cared deeply about how their money was invested;
they wanted strong returns but did not want to compromise their
principles in achieving them. It was our belief that this group of
investors would grow if we could show sustainable investing worked.
Let us look back and see how we have fared over the subsequent
20 years. We have always compared ourselves to mainstream
benchmarks and funds and, on this basis, have delivered better
returns than the IA peer group in all six strategies, as the bar chart
below highlights. For those few clients who invested in our SF
Managed Fund on day one, £1,000 would have become £3,655
versus the IA Mixed Investment 40-85% Shares sector average of
£2,536*.
These figures would be £3,544 for SF UK Growth versus £2,586 from
the UK All Companies sector average and £4,106 for SF European
Growth versus £3,076 from the Europe ex-UK sector average*.
2003
World Development
Report draws attention
to the fact 2.8 billion people are living
on less than $2 a day, almost all in
developing countries.
SF Funds versus comparator benchmarks over 20 years*
350%
300%
250%
200%
150%
100%
50%
IA Sterling
Corporate Bond
iBoxx Sterling Corporate
All Maturities
Sustainable Future
Corporate Bond 2 Inc
IA Flexible Investment
Sustainable Future
Managed Growth 2 Acc
IA Global
MSCI World
Sustainable Future
Global Growth 2 Acc
IA Mixed Investment
40-85% Shares
Sustainable Future
Managed 2 Inc
IA Europe Excluding UK
MSCI Europe ex UK
Sustainable Future
European Growth 2 Acc
IA UK All Companies
MSCI UK
Sustainable Future UK
Growth 2 Acc
0%
Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from it
can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss
of capital. *Source: FE Analytics, 19.02.01 to 19.02.21, primary share classes, total return, net of fees, income and interest reinvested.
Liontrust: 20 Years of Sustainable Investing - 3