Of this growth, providers in other markets can only dream of doing: With over 63 billion euros, the investment volume was for sustainable investment funds in Germany at the end of 2019. This is the forum for Sustainable investments (FNG) ten Times as much as ten years earlier. “There is a very strong growth in this area,” says FNG-managing Director Angela McClellan. Because private investors are increasingly involved: Their share have doubled in the past year, according to McClellan.
More and more investors put in the money investment on sustainable products. And you can draw on a growing range of Around 800 investment funds with a focus on sustainability, there are now in Germany, the Fund rating Agency Scope. But how do investors find the right Fund? The most important questions and answers.
How to work with sustainable funds?
Add facility to add objectives, such as the return on, or the security of a sustainable strategy. The Fund provider of ethical and ecological criteria. Sustainable share Fund is about to invest in listed companies that meet the criteria. Has established itself as Standard in this case, the abbreviation “ESG”. It stands for Environment (environmental), Social (social Affairs) and Governance (corporate governance). Sustainable funds on companies and industries, and the environmental and social aspects of particular note and value on good corporate governance set.
Almost all of the funds work according to the exclusion principle: companies or industries that do not meet the sustainability Standards that are taboo. The concerns about weapons manufacturers, tobacco producers or energy companies that operate nuclear power plants. “The exclusion criteria of the Fund, however, are different strictly,” says Karin Baur, expert for sustainable investments in the Stiftung Warentest. So make makers your money with fossil fuels, i.e. coal or Oil are to be found in sustainable funds. This is detrimental to the climate. “Alone from the concept of sustainability, you can’t see, therefore, what exactly are the funds,” says Karin Baur. The differences can be large – between actively managed funds, as well as between active funds and passive ETF.
What distinguishes an actively managed sustainable share Fund of a sustainable ETF?
In the case of an actively managed sustainable equity Fund a Fund Manager selects the title, in the Fund. An ETF, on the other hand, an exchange traded Fund, is a sustainable Index. “What companies the ETF contains, therefore, dependent on how the index provider applies its stock selection,” says Jörg Weber, Manager of the industry service Ecoreporter, the rating of regular, sustainable money system. Many providers go after the “Best-in-Class”principle: From each sector the most sustainable companies will be filtered out. So, too, companies from non-sustainable industries in the ETF, so about petroleum, aviation, or coal companies, land but. “Much of what is recommended as a sustainable ETF, therefore, is often not so sustainable,” says Weber. Investors should look at, therefore, the composition of the Fund.
Also active funds often work according to the Best-in-Class principle. You have, in addition to the Fund Manager, but often a sustainability Advisory Board. “In that independent experts who have a say in the selection of stocks sit,” says Jörg Weber. The selection of sustainable companies can be targeted and strict. However, The stricter the sustainability criteria, “the smaller the selection of titles is”, is Angela McClellan noted that “the risk of the investment increases.” Add to this: Active funds have significantly higher costs than a passive ETF.
How to cut a sustainable Fund at the rate of return?
The Stiftung Warentest has addressed this issue in its recent analysis of the sustainable Fund. Conclusion: “Sustainable funds, and investors must not compromise on yield,” says Karin Baur. For example, a comparison of the global equity index MSCI World with its sustainable counterpart, the MSCI World Socially Responsible Investing (SRI) index: The sustainable Index scores for several years, regularly better. One reason is the the Oil shares in the conventional Index, which were previously pretty bad to be.
Sustainable funds show up, in addition, often more crisis-resistant than conventional. So were, according to an analysis by the rating Agency Scope of sustainable funds in the Corona Crash, on average, their benchmark index. Conventional funds performed worse. Also, according to the investigation of the Stiftung Warentest, Öko-Fonds have survived the Corona-crisis on the stock markets. “It was, however, in the case of the sustainable funds in the crisis, in part, strongly downwards,” says Karin Baur.
How to find investor to the right Fund?
In the selection of sustainable Fund or ETF, the Fund can help databases. So, for example, the Forum has created Sustainable investments for many of the Fund’s sustainability profile. In addition, the FNG is providing a sustainability seal, the wear so far, well over 100 funds. In the basic Version, the seal requires a minimum standards, such as the exclusion of weapons, armor, nuclear power, coal, or the violation of human rights. Additional seal-star there is for credibility, or a particularly sustainable product standards.
Also, the Stiftung Warentest has introduced for its Fund database, most recently, a sustainability assessment. Generally speaking, investors should look for in the selection to spread the risk as broadly as possible, says tester Karin Baur. ETF’s are suitable but generally less strict in the area of sustainability. It therefore recommends a combination of ETF’s and active funds. Who choose only active funds, it recommends, two or three products to purchase: “It can always happen that a Fund Manager has an unhappy knack.”