Virgin Money Launches New ‘Climate Change Fund’

As consumers increasingly look to go green, research reveals that investing in environmentally aware companies can improve investment performance

Virgin Money is launching the innovative Virgin Climate Change Fund which will invest in high performing, environmentally focused companies to drive market beating investment returns.

Unlike typical ‘green’ funds, The Virgin Climate Change Fund can invest in all industry sectors but will only invest in companies with lighter than average environmental footprints for their sector. This ‘lighter footprint’ strategy aims to capitalise on research which suggests that companies with a strong environmental focus can outperform their ‘dirtier’ competitors.

To launch the fund Virgin have teamed up with leading asset management firm GLG Partners, who will act as the fund advisors, and leading environmental research organisation Trucost PLC, who will provide the environmental data. Trucost wrote the UK Government’s environmental reporting guidelines, published in 2006.

Like the Virgin Climate Change Fund, the companies in that portfolio are chosen from a performance and then environmental standpoint where no industry is excluded. Companies currently held in the GLG Environment Fund include BG Group, Xstrata and Renault.[6]

The Virgin Climate Change Fund, which opens for business on January 21st and is available through IFAs and direct to the public, will be open to investors with minimum investments of £50 a month or a £500 lump sum.

At least 75 per cent of the fund will be invested in an environmentally-filtered basket of European shares - only companies who have a better than average environmental footprint for their sector will be selected.

Up to another 15 per cent will be invested into Solution Adopters which are companies adopting environmental best practice and up to a further 10 per cent will be invested in Solution Providers which are firms specialising in offering solutions to environmental problems.

There are no initial charges, a 1.75 per cent annual management charge and a 20% performance bonus.

In order to earn a performance bonus the fund has to outperform two benchmarks. First the fund has to deliver a greater return than the Bank of England base rate. Plus the fund must also exceed something known as the High Water Mark which is the previous highest unit price reset on a rolling six monthly basis. If the fund fails to beat the High Water Mark or the Bank of England base rate the performance fee is not paid.

The Climate Change Fund will be available within Virgin Money unit trusts, ISAs and PEPs.