Virgin Money Launches New 'Climate Change Fund'

As consumers increasingly look to go green, research reveals that investing in environmentally aware companies can improve investment performance

As consumers increasingly look to go green, research reveals that investing in environmentally aware companies can improve investment performance


Virgin Money is launching the innovative Virgin Climate Change Fund which will invest in high performing, environmentally focused companies to drive market beating investment returns.

Unlike typical 'green' funds, The Virgin Climate Change Fund can invest in all industry sectors but will only invest in companies with lighter than average environmental footprints for their sector. This 'lighter footprint' strategy aims to capitalise on research (1) which suggests that companies with a strong environmental focus can outperform their 'dirtier' competitors.

This new fund comes at a time when consumers are increasingly demanding more information about the environmental damage companies cause. Research from Virgin Money (2) reveals that up to 29 per cent of consumers - around 10.9 million people - have favoured products and services from environmentally aware companies in the past year as they have woken up to the issue of climate change. And around 68 per cent of people say if data on companies' carbon footprints was more readily available they would pay more attention to the issue.

To launch the fund Virgin have teamed up with leading asset management firm GLG Partners, who will act as the fund advisors, and leading environmental research organisation Trucost PLC, who will provide the environmental data. Trucost wrote the UK Government's environmental reporting guidelines, published in 2006.

Until now GLG has typically only worked for high net-worth individuals and financial institutions and has a record of strong and sustained performance. Since launching their first fund in 1997, GLG has achieved a 16.8% net-of-fees annualized invested capital weighted return on its alternative strategies through September 2007.(3) GLG already runs a similar fund to the Virgin Climate Change Fund, the GLG Environment Fund which has, between January and December 2007, returned 7.02% net of fees (4) compared to the MSCI Europe Index (5) return of 1.62% for the same period.

Like the Virgin Climate Change Fund, the companies in that portfolio are chosen from a performance and then environmental standpoint where no industry is excluded. Companies currently held in the GLG Environment Fund include BG Group, Xstrata and Renault.(6)

The Virgin Climate Change Fund, which opens for business on January 21st and is available through IFAs and direct to the public, will be open to investors with minimum investments of £50 a month or a £500 lump sum.

Virgin Money CEO Jayne-Anne Gadhia said: "We're delighted to be able to bring GLG's expertise within reach of all UK investors and deliver a high performance investment fund which is also better for the environment.

The climate change issue is too often seen as one where consumers have to pay a price. There is too much 'stick' and not enough 'carrot'. Our new Climate Change Fund is a straightforward way for investors to put their money into companies at the forefront of changing how businesses operate. And far from having to compromise on investment performance this strategy actually improves it."

Pierre Lagrange, Co-Founder of GLG and advisor to the Virgin Climate Change Fund with Ben Funnell, said: "Companies which do not adapt to changes in public opinion on environmental impact could see their returns suffer in the future.

"Governments and regulators are likely to increase costs for companies which do not take into account environmental impacts and encourage those that do with subsidies and tax breaks. That creates opportunities for managers such as GLG to invest in high performing greener, cleaner companies and produce strong returns for investors."

Sir Richard Branson said: "Climate change is an issue which affects us all. Consumers are changing the way they spend and are increasingly looking for more environmentally friendly ways of investing their money too. I'm delighted to be teaming up with GLG Partners in offering the Virgin Climate Change Fund and look forward to delivering our investors excellent performance without it costing the Earth."

At least 75 per cent of the fund will be invested in an environmentally-filtered basket of European shares - only companies who have a better than average environmental footprint for their sector will be selected.

Up to another 15 per cent will be invested into Solution Adopters which are companies adopting environmental best practice and up to a further 10 per cent will be invested in Solution Providers which are firms specialising in offering solutions to environmental problems.

There are no initial charges, a 1.75 per cent annual management charge and a 20% performance bonus.

In order to earn a performance bonus the fund has to outperform two benchmarks. First the fund has to deliver a greater return than the Bank of England base rate. Plus the fund must also exceed something known as the High Water Mark which is the previous highest unit price reset on a rolling six monthly basis. If the fund fails to beat the High Water Mark or the Bank of England base rate the performance fee is not paid.
The Climate Change Fund will be available within Virgin Money unit trusts, ISAs and PEPs.

Consumers can apply direct at www.virginmoney.com/funds or call 08456 10 20 20

IFAs can apply at www.virginmoney.com/ifa or call the Cofunds team on 08456 044001

Notes to editors:

1 - A simulated back test by GLG using Trucost data showed that a 'cleaned' portfolio would have outperformed their flagship European Equity Fund by 0.33% annually and with a substantially lower environmental footprint. Realised GLG Environment Fund return on capital employed (ROCE) data for the clean European Long Only Strategy from 01-Mar-07. GLG Environment Fund ROCE data prior to then has been simulated. The simulated data above is based on the performance of GLG European Equity Fund, another sub-fund of GLG Investment plc, to which the GLG Green Filter has been applied. The simulated data does not reflect the past performance or future performance of the GLG Environment Fund. Past performance of GLG Partners LP as Investment Manager can be no guarantee of future results. Source: Trucost, GLG Partners LP

2 - TNS interviewed 1,004 UK adults online between November 20th and 22nd 2007

3 - Invested capital weighted returns are calculated as the composite performance of all constituent funds, weighted by fund size. Performance measured by core class in each fund. First GLG fund began trading in January 1997; as a result, indices are rebased to 100 as at January 1, 1997, with monthly datapoints through to September 30, 2007. Annualized returns calculated on basis of monthly pricing data. Based on actual published NAVs as at 30 September 2007.

4 - Based on actual published NAV to 31st December 2007 for GLG Environment Fund
Class M EUR

5 - MSCI Europe LC - Source Micropal

6 - Illustrative of companies held in the GLG Environment Fund as at 11th January 2008. These companies may or may not be held within the Virgin Climate Change Fund

Featured Product

Bonfiglioli - Integrated AGILE frequency inverter for wind turbines

Bonfiglioli - Integrated AGILE frequency inverter for wind turbines

Integrated Agile, Bonfiglioli's frequency inverters for wind turbines, are available as custom design products on request, for Wind Solutions system integrators. Integrated Agile inverters can be mounted directly to the motor and represent a very compact alternative to the traditional yaw system without inverter or with the motor supplied by a standard frequency converter installed in a cabinet.