New funds aim to help investors reduce carbon footprint

The UK's first asset management company exclusively focused on the carbon market plans to launch two funds.

The firm, Carbon Footprint Fund plc (CFF), is designed to give investors the opportunity to benefit from tightening global restrictions on carbon polluters.

CFF underlined the investment opportunity, pointing out that world leaders are working on ‘Global Cap and Trade’ legislation with the aim of a creating an international carbon reduction agreement.

It also highlighted UK legislation, such as the Climate Change Act 2008 and the Carbon Reduction Commitment Energy Efficiency Scheme which went live in April, as evidence of increased regulatory pressure which will ultimately levy financial penalties on organisation failing to comply.

To tap into this theme, the firm is launching two funds, which have been developed in conjunction with BNP Paribas and environmental data provider Trucost.

The IFSL Carbon Footprint UK 350 Equity Index Tracker Fund and the IFSL Carbon Footprint Global Equity Index Tracker will track two equity market indices calculated by FTSE International -  the UK 350 Carbon Optimised Index and the Global (ex UK) Carbon Optimised Index.

The funds employ a hybrid procedure for selecting investments, combining a passive filter with an active overlay. It has the flexibility to invest across the whole of the market.

CFF chief executive, Ralph Pettengell, said: 'The funds are more mainstream than existing ethical or ecological funds which are typically aimed at a niche market willing to accept ‘principles before profits’

'Our funds enable investors to lower the carbon footprint of their portfolios, typically by around 25% compared to a typical tracker without a performance penalty. At the same time they are designed to meet the IFAs’ needs for achieving close to the average equity market returns at reasonable risk.'

During the launch period the funds are being offered at a discounted initial charge of 1%, with an annual management charge of 1.5%, including 0.5% trail commission.