Financial markets have risen sharply in November and demand for green investments has been strong.
The past month has been one of spectacular success for global stock markets. Investors reacted positively to both the US election result and news of a first vaccine for coronavirus, leaving every major share index in positive territory over the past four weeks.
Although President Trump still has not conceded the election, it is unthinkable that Joe Biden will not be at the inauguration ceremony on 20 January. After many months of speculation, the Democrat’s victory brought an element of clarity to the near-term outlook, at least politically. There now seems more chance of economic stimulus and less likelihood of extra regulation and an anti-business agenda.
Traders are also pricing in an end to the pandemic some time next year. Current consensus appears to be late spring. Following the Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) announcement at the start of the month, we now have another two potential vaccines, this time from Moderna (NASDAQ:MRNA) and Oxford University-AstraZeneca (LSE:AZN). There will be more.
Of course, there are events and government strategies that currently make investing in the UK different to elsewhere.
The Brexit saga, which began in 2016, looks to be nearing a conclusion one way or another. The transition period ends on 31 December and we still don’t have a trade deal. Judging by reports over the past few days, there’s still lots of work to do during the remainder of 2020.
One of the major strategy thrusts of the current government has been the green economy. The UK has just launched a 10-point plan for a green industrial revolution ahead of the 26th United Nations Climate Change Conference, also known as COP26, hosted by Glasgow in 2021. The summit aims to get countries to speed up progress towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.
Extra investment in offshore wind, hydrogen, nuclear, electric vehicles, part of a drive toward a net zero carbon emissions by 2050, will create and support up to 250,000 British jobs.
There has also been significantly greater interest in ethical investing, particularly funds, investment trusts and exchange-traded funds (ETFs), over the past year, and this new political commitment only intensifies the focus on funds and stocks with environmental benefits.
interactive investor customers have certainly been enthusiastic buyers of green investments, as evidenced by engagement with our ACE 40 list of rated ethical funds and trusts.
Most-bought ACE 40 investments over the past month
|iShares Global Clean Energy ETF|
|Baillie Gifford Positive Change B Acc|
|Impax Environmental Markets (LSE:IEM)|
|Royal London Sustainable World C Acc|
|Fundsmith Sustainable Equity I Acc|
|Rathbone Ethical Bond I Acc|
|Royal London Sustainable Leaders C Acc|
|Baillie Gifford Global Stewardship B Acc|
|Liontrust UK Ethical 2 Net Acc|
|Source: interactive investor between 25 October and 24 November 2020|
ACE 40 stands for:
Funds that focus on simply excluding companies, sectors or specific business practices.
Funds that carefully consider an often wide range of ethical and/or environmental, social and governance (ESG) issues or themes when balancing positive and negative factors.
Funds that focus on companies delivering positive social and/or environmental outcomes.
ACE 40 rated investment performance over the past month
|Liontrust UK Ethical 2 Net Acc||11.04|
|iShares MSCI EM SRI ETF USD Acc GBP (LSE:SUES)||10.76|
|Unicorn UK Ethical Income B Acc||10.35|
|iShares Global Clean Energy ETF USD Dist GBP||9.79|
|Janus Henderson UK Responsible Inc I Inc||9.30|
|UBS ETF MSCI Pacific SRI USD A dis GBP (LSE:UB45)||8.69|
|L&G Ethical I Acc||8.63|
|BMO Responsible UK Income 2 Acc||8.16|
|Vanguard SRI European Stk EUR Acc||6.28|
|Aegon Ethical Equity GBP B Acc||5.40|
|Source: SharePad *Price change between 25 October and 24 November 2020|
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