ii ACE 40 performance review: Q2 2025
Here’s how interactive investor’s sustainable funds performed in the three months to the end of June.
14th July 2025 11:44

Over the quarter, the strength of growth-biased and small-cap equities (ex the US) versus value-biased equities and bonds, explains much of the relative performance of the funds on the ACE 40 list.
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The strongest-performing fund was Polar Capital Smart Energy, which posted a return of 16.74%. This alternative energy fund is managed by the experienced Thiemo Lang. The investment process focuses on bottom-up selection of quality-growth companies that trade at reasonable valuations and provide solutions that enable the decarbonization and electrification of the global energy sector.
High exposure to the technology sector is a feature of this fund and that helped propel the fund’s returns this quarter as the sector rebounded strongly.
Two European equity funds also feature on the top five performers’ list, reflecting the good returns from that region. The M&G European Sustain Paris Aligned fund has a focus on companies showing sustainable competitive advantages and this results in a growth bias and a slight bias down the market-cap scale, both of which were positives and contributed to the 11.51% return. Attribution versus the Morningstar DM Eur xUK TME Index shows outperformance with stock selection as the main positive, particularly within communication services and healthcare.
EdenTree European Equity showed a gain of 9.47%. It adopts a contrarian, value approach and focuses on stocks that are out of favour, are more cyclical by nature, or are undergoing what are deemed to be temporary difficulties.
Positive environmental, social and governance (ESG) screening is also employed. Despite the value bias being a headwind, the fund’s bias down the market-cap scale was a benefit. Attribution versus the Morningstar DM Eur xUK TME Index shows stock selection as the main contributor to outperformance, primarily within financials.
VT Gravis Clean Energy Income aims to provide an income in the region of 4.5% and primarily invests in closed-ended investment companies and yield companies that are involved in the provision, storage and consumption of clean energy. With a positive return of 10.51%, the fund outperformed the higher-risk S&P Global Clean Energy Index with notable success from names such as EDP and Corporacion Acciona Energias Renovables SA (XMAD:ANE).
With the US market underperforming global markets over the quarter, the Brown Advisory US Sust Growth did well from its exposure to growth stocks. The managers of this fund incorporate sustainable investing traits into their long-term fundamental research process, which focuses on identifying sustainable business advantages. Attribution versus the mainstream Morningstar US TME Index shows the overweight to IT and stock selection within that sector as the main driver of outperformance.
Turning to the bottom of the performance list, the weakest return over the quarter was seen by the PIMCO GIS Global Bond ESG fund, but this was still a positive return of -1.78%. The fund seeks to outperform the Bloomberg Barclays Global Aggregate GBP hedged benchmark, which it outperformed over the quarter, using an approach that allows for considerable flexibility.
PIMCO’s top-down views guide decisions and within the scope of these themes the managers will consider relative valuations to determine sector, country and yield-curve positioning. The ESG credit overlay favours green bonds, issuers with smaller carbon footprints, and those that score well on other ESG metrics.
The Fidelity Asia Equity ESG fund (formerly named Fidelity Sustainable Asia Equity)produced a small positive return over the quarter of 2.81% from a portfolio which has a focus on stocks with quality-growth characteristics and some exposure to turnaround situations where a catalyst is evident. Versus the MSCI AC Asia ex Japan Index the fund underperformed over the quarter but over the longer term it has produced outperformance under the current manager’s guidance.
With a return of 2.01%, the next fund on the list is Baillie Gifford Responsible Global Equity Income. This income fund focuses on dividend growth stocks and therefore has less exposure to higher-yielding stocks in industries which are cyclical or lack structural drivers. This results in a portfolio that can at times show a yield only slightly higher than the mainstream MSCI ACWI benchmark and a slight growth bias.
These biases are persistent and more obvious versus global equity income peers. Over the quarter, the fund underperformed the mainstream Morningstar Global TME Index but marginally outperformed peers in the Morningstar EAA Fund Global Equity Income Category, with medium-term returns being acceptable against both comparators.
Stewart Investors Global Emerging Markets Sustainabilityshowed a 2.09% return over the quarter, which was behind the Morningstar EM TME Index. The investment approach focuses on sustainable growth stocks with higher-quality elements, particularly regarding management teams, and this can result in the fund being out of line with market movements in the short term.
Attribution highlights stock selection in IT and industrials as the main sector level detractors, while on a country basis stock selection in Taiwan and Brazil were negatives. Relative returns have suffered of late, but the approach has shown strong defensive characteristics in the past.
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The fund with the fifth-lowest return over the quarter was CT UK Social Bond, with a positive 2.34%. The fund has a twin objective of achieving both a financial return and delivering a social impact through investing in sterling corporate bonds. The financial strength of all investments is key and is the starting point for consideration for inclusion in the portfolio.
In addition, every investment is evaluated for its social good characteristics with the portfolio seeking to have a minimum exposure of 80% to UK outcomes.
The portfolio is constructed from the bottom up, and from a duration, yield and ratings perspective has a profile which is very similar to that of its benchmark, the ICE BofA 1-10 Year Sterling Non-Gilt Index. Returns over the quarter were just 15bps behind the index return, which isn’t constrained by social impact aims.
Top five ACE 40 funds in Q2 2025
Group/Investment | 3 months | YTD | 1 year | 3 years | 5 years |
Polar Capital Smart Energy I Acc | 16.74 | 1.56 | 9.75 | 29.65 | |
M&G European Sustain Paris Aligned I Acc | 11.51 | 14.50 | 12.43 | 65.38 | 82.32 |
VT Gravis Clean Energy Income C GBP Acc | 10.51 | 9.49 | -0.73 | -22.10 | 4.46 |
Brown Advisory US Sust Gr GBP B Inc | 10.03 | -3.96 | 1.98 | 50.46 | 71.57 |
EdenTree European Equity B Inc | 9.47 | 18.86 | 16.86 | 55.35 | 83.32 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 30/06/2025. Past performance is not a guide to future performance.
Bottom five ACE 40 funds in Q2 2025
Group/Investment | 3 months | YTD | 1 year | 3 years | 5 years |
Rathbone Ethical Bond Fund I Acc | 2.47 | 3.55 | 6.32 | 15.51 | 6.41 |
CT UK Social Bond Z Grs Acc£ | 2.34 | 3.62 | 6.02 | 11.85 | 3.97 |
Stewart Inv Glbl EM All Capnby B GBP Acc | 2.09 | -5.86 | -8.33 | 6.05 | 11.03 |
Baillie Gifford Rspnb Glb Eq Inc B Acc | 2.01 | -0.05 | -0.87 | 27.81 | 54.65 |
PIMCO GIS Global Bond ESG Instl GBPH Inc | 1.78 | 3.45 | 6.29 | 11.09 | 2.18 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 30/06/2025. Past performance is not a guide to future performance.
Top five ACE 40 funds over five years
Group/Investment | 3 months | YTD | 1 year | 3 years | 5 years |
EdenTree European Equity B Inc | 9.47 | 18.86 | 16.86 | 55.35 | 83.32 |
M&G European Sustain Paris Aligned I Acc | 11.51 | 14.50 | 12.43 | 65.38 | 82.32 |
iShares MSCI USA SRI ETF USD Acc (LSE:SUAS) | 5.41 | -4.97 | 3.24 | 35.34 | 78.85 |
Wellington Global Stewards GBP N Acc | 4.09 | -1.02 | 4.10 | 37.55 | 78.29 |
Brown Advisory US Sust Gr GBP B Inc | 10.03 | -3.96 | 1.98 | 50.46 | 71.57 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 30/06/2025. Past performance is not a guide to future performance.
Bottom five ACE 40 funds over five years
Group/Investment | 3 months | YTD | 1 year | 3 years | 5 years |
CT UK Social Bond Z Grs Acc£ | 2.34 | 3.62 | 6.02 | 11.85 | 3.97 |
PIMCO GIS Global Bond ESG Instl GBPH Inc | 1.78 | 3.45 | 6.29 | 11.09 | 2.18 |
Liontrust Sust Fut Corp Bd 2 Grs Inc | 3.13 | 3.93 | 6.00 | 14.83 | 1.09 |
iShares Global Clean Engy Trns ETF $Dist GBP (LSE:INRG) | 9.31 | 5.36 | -9.35 | -37.11 | -1.66 |
Amundi Glb Aggt Green Bd ETF Acc GBP (LSE:CLIM) | 2.62 | 2.61 | 4.16 | 2.81 | -16.71 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 30/06/2025. Past performance is not a guide to future performance.
Most-bought ACE 40 funds in Q2 2025
Royal London Sustainable World C Acc |
Royal London Sustainable Leaders C Acc |
iShares Global Clean Engy Trns ETF $Dist GBP (LSE:INRG) |
Pacific Assets Ord (LSE:PAC) |
Royal London Sustainable Div C Acc |
Most-sold ACE 40 funds in Q2 2025
Changes to the ACE 40 list (under review/developments)
None in Q2.
ACE 40 videos in Q2
None in Q2.
The ACE 40 investments list is selected and managed by our independent research partner Morningstar and reviewed by our in-house investment experts to help narrow down the wide choice of available investment products. We believe it represents a set of high-quality choices, across different asset classes, regions, and investment types.
However, you should note that the selection of ACE 40 investments list is not a ‘personal recommendation’. This means we have not assessed your investment knowledge, your financial situation (including your ability to bear losses), your investment objectives, your risk tolerance, or your sustainability preferences.
You should ensure that any investment decisions you make are suitable for your personal circumstances, and if you are unsure about the suitability of a particular investment or think you need a personal recommendation, you should speak to a suitably qualified financial adviser.
The past performance of an investment is not a reliable indicator of future results, and ii does not guarantee or predict the future performance of the ACE 40 investments list as a whole or the constituent investments.
Risk Warning(s)
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Investing in emerging markets involves different risks from developed markets, in many cases the risks are greater.
The value of international investments is affected by currency fluctuations which might reduce their value in sterling.
Disclosure(s)
All funds listed are the Accumulation version of the fund, where available, where any income generated within the fund is reinvested automatically. Income versions of these funds may also be available for investors looking for income generated to be paid directly into their account.
Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.
Any changes to the ACE 40 investments list and the rationale behind those decisions will be communicated through the Quarterly Investment Review.
Details of all ACE 40 recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Members of ii staff may have holdings in one or more ACE 40 investments, which could create a conflict of interest. Any member of staff involved in the development of research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, staff involved in the production of the ACE 40 investments list are subject to a personal account dealing restriction. This prevents them from placing a transaction in the specified instrument(s) for five working days before and after an investment is included or amended and made public within the ACE 40 investments list. This is to avoid personal interests conflicting with the interests of investors in the ACE 40 investments.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.