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record year for ESG funds as sales hit £16bn

Financial Institutions Given New ESG Reporting Requirements By EBA

Responsible fund sales hit a record high of £16bn last year, a London analyst has told ESG Insight.

Being a very broad church, this encompasses a range of approaches to ESG investing.

Laith Khalaf, head of investment analysis at AJ Bell, said that “at one end of the spectrum we find funds which consider ESG factors, but may not make specific exclusions from their portfolio, while the other end is home to funds where every investment is chosen for its positive impact on sustainability issues.”

“It’s therefore unclear how much of the exceptional rise in ESG fund sales is down to demand, and how much can be attributed to a reclassification of funds that previously wouldn’t have been considered ethical options,” Khalaf explained.

“This underlines the importance of the FCA’s current work on a green funds labelling regime, which should hopefully bring some much needed clarity to an area which is currently characterised by a myriad of shades of grey.”

Wherever investors choose to put their money this year, there are two concrete steps they can take to address choppy markets and tax rises.

“The first is drip feeding money into the market regularly gradually, which makes for a smoother journey, and takes the angst out of investing.”

“The second is to make sure their savings and investments are held in tax shelters wherever possible, to protect their money from the coming tax storm,” Khalaf concluded.

Read also: Climate risk data is a hot mess.

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