How our climate-friendly fund generated higher returns
If you have a OneFamily ISA or Lifetime ISA, then you’re investing all or some of your money in our climate-friendly funds.
You might have chosen OneFamily for this very reason. Like us, you want to do what you can to protect the environment and don’t want to invest your money in companies that don’t share your moral values.
Whatever your reason, we’re sure you’ll be happy to hear that in our most recent performance summary (1 July – 30 September 2022), OneFamily Global Equity Fund outperformed the index we benchmark against (MSCI World Index).
In fact, our climate-friendly fund generated 0.38% higher returns than the benchmark!
Returns for OneFamily Global Equity Fund versus the corresponding benchmark as of 30 September 2022:
| Three months | Since inception | |
|---|---|---|
| OneFamily Global Equity Fund (Gross) | 2.44% | 9.16% |
| MSCI World Index | 2.06% | 8.82% |
| Difference | 0.38% | 0.34% |
Why did the climate-friendly fund outperform the benchmark?
Investment funds buy stocks and shares in several different companies, known as a “portfolio” of companies. Climate-friendly funds, like ours, choose these companies based partly on how they make their money.
We look at how much carbon they produce for the money they make, whether they violate UN principles, like human rights violations, and, crucially, how prepared they are for climate change. This is called “climate change preparedness” or “adaptation score”.
Generally speaking, companies that are taking action now, for example by reducing their carbon output before rules and regulations are brought in, stand a greater chance of us including them in our fund portfolio.
They can be seen as being more ready for the future than companies that aren’t yet taking action. For obvious reasons, we feel that future-proof companies are a safer long-term investment.
How companies' actions impact the portfolio
We’re constantly changing our portfolio based on how well companies fit with our climate-friendly principles.
For example, ExxonMobil has high fossil fuel reserves, produces no green revenues and produces a comparably large amount of brown revenues. Because of this, ExxonMobil is excluded from the portfolio.
The Canadian National Railway, on the other hand, is upweighted in the portfolio, meaning it makes up a bigger proportion. Railways in general are helpful in reducing climate emissions as they take cars off the road, but the Canadian National Railway shows particularly favourable climate metrics data even compared to others in the sector.
With stocks and shares products, the value of your investment can go down as well as up and past performance is not a reliable indicator of future results.
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