Jupiter Ecology Fund Review

Posted: 05 February 2008 by Jenny Rhodes

Not only was Jupiter's Ecology Fund one of the earliest ethical investment funds, it is also considered to be 'dark green'. Launched in April 1988, Ecology was only preceded by Friends Provident Stewardship fund (the UK's first retail ethical fund), which launched four years earlier. Ecology has its own in-house ethical research team, and uses some additional research from Innovest.

What makes Ecology 'dark green' is its use of both negative and positive screening to select its investment portfolio from companies worldwide. Negative screening means the fund excludes from its investment portfolio companies that are considered to be harmful to people, animals or the environment. It limits the number of companies the fund can invest in.

In the case of the Jupiter Ecology Fund, it avoids investments in any company that derives over ten per cent of its turnover from armaments, alcohol or tobacco product manufacturers, publishers of pornography, nuclear power generation or operation of gambling activities. The fund does invest in companies that derive less than ten per cent of its turnover from these activities, though -- the fund's get-out clause being: "but only if it makes an outstanding contribution to sustainable development in other respects".

On a stricter note, the fund doesn't invest in any company that carries out or commissions animal tests for cosmetics and toiletries. Animal activists may be disappointed that the fund does not totally exclude companies involved with animal testing for other products, however, as companies involved in animal testing are included in investments providing they have committed to minimising the tests and are, again, substantially contributing to sustainable development.

On the positive screening side, the fund specifically invests in companies that provide solutions to environmental and social problems, particularly clean energy, water and waste management, green transport, sustainable living and environmental services. So for example, in its top ten holdings are two major wind turbine manufacturers -- Nordex and Vestas Wind Systems. It also invests in companies that have been proven to manage their environmental and social impacts well.

The Ecology fund carries an initial charge of five per cent and an annual charge of 1.5 per cent. This is pretty much on par with charges for most ethical funds, although there is a little variation -- for example, the F&C Stewardship International fund (also a global growth fund) has a lower annual charge of 1.38 per cent, though it has the same initial charges. Of the non-ethical global growth funds, there's more choice, and more options for finding funds with slightly lower initial and annual charges.

For example, the Artemis Global Growth fund charges only a four per cent initial fee, with a one per cent annual charge. For investors prepared to invest without independent financial advice, there is scope to reduce these fees further by investing through a discount broker on an execution-only basis.

The minimum investment in the Ecology fund is £50 per month or £500 lump (with lower additional contributions of £250 allowed). The fund is available as both an ISA and a PEP/ISA transfer.

The fund suffered heavy losses in the 2001 and 2002 market slump, but according to Trustnet, over the last three years it has performed best of all the ethical funds (achieving 78.6 per cent growth against the ethical sector average of 43.9 per cent). Past performance should not be taken as a guarantee of future growth, in other words.

All in all, the Jupiter Ecology Fund is a good bet, avoiding the most heinous unethical activities and investing in and driving new environmental solutions. Its specific investment focus means it has suffered in the markets in the past, but the knowledge and experience of its fund team makes it look like a good green home for your money in the long term.