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Ethical funds a green jungle.

EVEN before BP's multibillion oil leak gushed into the Gulf of Mexico this year, savers were moving millions of pounds in savings and pensions towards green companies committed to protecting the environment.

That's the claim of National Ethical Investment Week, which says our total ethical savings and investments surged more than by 30% in the past year alone - up from pounds 14.3 billion to pounds 19.2 billion.

Penny Shepherd, chief executive at UKSIF, the sustainable investment and finance association, says: "After a decade that almost ended in global financial meltdown, attitudes are changing from greed is good to green is good - less Gekko, more eco.

"The 2010s are set to become the decade of financial responsibility, as more people try to make a difference with their money."

Ethical funds were also boosted because they escaped much of the fallout from the global crash of 2008. They are lightly exposed, for instance, to the banking sector.

However, green funds still account for only a tiny part of total savings. Around pounds 542 billion is held in UK-authorised unit trusts and open-ended investment companies and the average UK household has pounds 750 savings in ethical funds and savings accounts.

But, Sue Round from Ecclesiastical Investment Management maintains: "We have long known the benefits of ethical investing for clients, and ethical funds compete for the top spots in fund ranking tables overall.

"We have seen the sector undergo real transformation towards being seen as mainstream in recent years and we expect this trend to continue."

Unless savers are keen students of financial markets, however, they might struggle to find a suitable ethical product.

Discount brokers - usually the cheapest way to invest for savers who know the fund they want to buy - have promoted South America and emerging markets more strongly this year.

Paul Penny from Financial Discounts Direct says: "Investors want either income or growth, which is more likely in emerging markets. Ethical funds are not strong on either aspect."

Defining a green fund gets tricky too.

Danny Cox from financial advisor Hargreaves Lansdown says: "Climate change funds are not green. They are likely to invest in a range of themes from solar and wind power to agriculture and hybrid cars.

"Green funds differ from a themed fund such as this as they adopt both positive and negative screening to ensure their ethical status. Climate change is a theme which requires a long-term view, albeit the performance has been lacklustre recently."

Ashley Clark from says: "Having 'ethical' or 'green' in a fund name may mean very little. Be mindful of so-called 'light green' compared to 'dark green' funds.". INFORMATION: The Share Centre 01296 414 141 and; Amity International Fund 0845 777 3322 and; Hargreaves Lansdown 0117 900 9000 and National Ethical Week; UKSIF www.uksif.or).

SHARE TIPS Aviva recently confirmed plans to refocus its business and said it would exit markets that did not have the scale or profitability it required, says the Sunday Telegraph.

This is likely to result in the sale of some smaller Asian businesses, such as its Taiwanese operations, and could see it exit European markets in which it has a limited presence.

Despite solid share price gains over the past few months, Aviva is still yielding 6.2% for new investors, which means the shares are still worth a look.


Savers and investors are increasingly putting their money into green funds - even before the Gulf of Mexico oil disaster
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Geographic Code:4EUUK
Date:Nov 15, 2010
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