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27 Apr 20
Coronavirus and its impact on sustainable investments
Since the Coronavirus hit Europe and the USA, the markets have fallen. Billions of pounds have been wiped off investment values. Investors are twitchy and worried about the future. However, there is some good news in all of this.
Sustainable investments: Number crunching
Our recent blog series about sustainable investments focused on this type of investment. We predicted that they will be a real growth area in the future as more and more investors were discovering the benefits of ‘Do Good, Make Money’.
Historically, many investors considered that this type of investment could not possibly give as attractive returns as conventional non-ESG investments. However, evidence is now emerging that the types of investments that have performed most favourably during the crisis could be sustainable/ESG investments.
For example, The Janus Henderson Global Sustainable Equity Acc Fund fell 16.10% between 24th February – 27th March 2020, whilst the sector average fell 17.41%. The Kames Ethical Corporate Bond B Acc Fund fell 7.26% over the same period whilst the sector average fell 8.26%. Finally, the Liontrust Sustainable Future Global Growth 2 Acc Fund fell 16.13% over the same dates. The sector average fell 17.41%. Additionally, over the same period the FTSE 100 itself fell by 25.58%. While we shouldn’t draw firm conclusions from just three examples, it does show that those who chose to invest in those sustainable assets will have experienced smaller losses than their counterparts who invested elsewhere.
The silver lining in the Coronavirus cloud?
The Coronavirus lockdown has benefited the environment as we have less cars on the road and air pollution levels have been reduced. Coronavirus has brought people and communities together, albeit whilst also keeping them apart for social distancing measures! People are helping out their neighbours and we have a renewed community spirit. It therefore makes perfect sense that this attitude will now trickle into our investment habits long after the virus is contained.