Hargreaves Lansdown has placed Janus Henderson UK Responsible Income and Trojan Ethical Income on its wealth shortlist.
Janus Henderson’s UK Responsible Income fund has been managed by Andrew Jones since 2012, with the support of the firm’s global equity income team. Meanwhile, the Trojan Ethical Income fund has been managed by Hugo Ure since launch in January 2016, and also leverages the expertise of its own equity income team.
Following these two additions, there are now five responsible investment funds on the list, out of a total of 71 funds – while 14 are passive.
Responsible investing has grown in prominence in recent years, and UK savers put almost £1bn a month on average into responsible investment funds in 2020, according to Investment Association (IA) data.
This trend has also been seen across Hargreaves Lansdown clients, who have put record money into Responsible Investment funds – net flows for 2020 were up over 4,000 percent against 2016.
Dominic Rowles, investment analyst at Hargreaves Lansdown said: “We believe that investing with ESG considerations in mind is simply good risk management – professional and individual investors alike should be looking to fill their portfolios with companies that are sustainable; delivering sustainable revenues, profits and – where applicable – dividends.”
Mr Rowles noted that income can be challenging for responsible investors though, as 70 percent of UK equity income funds invest in tobacco companies, 78 percent own mining shares, over 80 percent have a holding in the oil and gas sector, and around half invest in aerospace and defence businesses. Funds that avoid these areas while reaping the rewards are very much in the minority, however the addition of these two strategies showed that it can be possible.
He added: “Funds that avoid these areas while also aiming to generate a reasonable level of income are few and far between – but they are out there.”
He also believed that these strategies would provide opportunities for investors more broadly.
The investment analyst concluded: “It’s not just ethical investors who could consider these funds. Their lack of exposure to typical equity income hunting grounds, like tobacco and oil and gas, means we expect the funds to perform differently to other equity income funds at times, which could bring diversification to a traditional equity income portfolio.”