Green M&A’s drive performance of SRI funds

The booming eco economy is fuelling a new wave of takeover activity that is helping socially responsible investments (SRI) to outperform the market according to a leading fund manager.

Mike Fox – manager of Sustainable Leaders Trust at Co-operative Investments - believes an increasing trend of companies buying existing environmental themed operations, rather than starting up a new business, in order to tap into the ethical pound is good news for investors with a conscience.

“Increasing ethical consumerism is providing new opportunities for companies to grow their business, and firms that have already developed products and services in this market are becoming more attractive to bigger players.” explains Mike Fox.

“Garden centre chains for example have recently began interesting big retailers because they are seen as the ideal vehicle for selling environmentally linked products such as wind turbines to consumers.”

CIS Sustainable Leaders Trust was the first ever SRI fund to top the UK All Companies Sector earlier this year. Latest performance numbers show a total return of 18.39 per cent for the 12 months to 31 August 2007, significantly better than the 11.84 per cent of the UK FTSE All-Share and 11.16 per cent achieved by the UK All Companies sector. Three year numbers are equally as impressive at 83.55 per cent, compared to returns of 62.04 per cent by UK FTSE All-Share and 55.67 per cent for UK All Companies.

Other green takeover activity that has benefited the performance of CIS Sustainable Leaders Trust includes Scottish Power, which received a takeover approach from a Spanish utility attracted by its wind energy business in the USA.

Co-operative Investments was launched to intermediaries last month and is part of Co-operative Financial Services (CFS) which has managed retail funds for around 20 years. It uses a distinctive responsible investment approach across its entire UK portfolio that integrates social, ethical and environmental (SEE) issues alongside financial consideration into investment decision-making. It believes the approach enables delivery of enhanced investment returns against competitors as sustainable business practice and strong long-term financial performance go hand in hand. For more information about its unique investment approach visit www.co-operativeinvestments.co.uk

Research by sister organisation the Co-operative Bank shows ethical consumerism is now worth more than £29bn to UK economy, more than alcohol and cigarettes.