Why so cheap for ESG type fund

ANGLICANPAT

 Decided to pick a  fund to follow, that Id never heard of ,just for fun. If it continued to do well, I might be tempted to jump in .  The criteria were  to be  green , 5* on  MS or Trustnet,  a fairly good performance  ie mostly in top 2 quartiles,  offer Acc    and be cheap. Picked out  Federated Hermes Impact Opportunities Equity T Acc  because its biggest holding is Orsted which Id read a bit about . Cant see this fund  offered on any platform  (why would that be ?) but its   been going about 3 years .  The ongoing  charge is only .16 which is  suspiciously cheap for an ESG type fund .   Its risk at 6 is no worse than some other ESG funds  , its past performance is ok  and seems on the up ,   so  is the low charge just because its new ?

dunstonh

Class T is not cheap.   You have to pay a fee on top of the OCF to have that share class.  The fee is negotiable with the fund house up to 1% and based on the size of holding the expected length of time you intend to hold it.    i.e.  its effectively institutional level for long term holdings.  Class Z is also fee based up to 3% pa.

Class F is £100k minimum
Class P is £400k minimum
Class X is £10mil minimum

Funds that don't appear on platforms can be for several reasons.  
1 - Non mainstream with no demand for it (no-one has asked for it)
2 - The fund house doesnt want it on a platform.
3 - The minimum amount is not expected to be met easily or quickly across the platform as a whole. So, they cant get qualification for that share class or come to an agreement.
4 - It fails the platform due diligence.

ANGLICANPAT

 Damn, there's no Y or Z for my 3 fig multi million start then lol?  --Thanks dunstonh - forgot about that aspect , I hadnt checked out  as only for fun. Will still follow  out of curiosity 

Just had a quick look to see where I would find that aspect for quick future looking -  this info below under  Trustnets unit details seems the same fund id?    Is that £1000 only if one could find a platform to accept such a low start?  So confusing .
Federated Hermes Impact Opportunities Equity T Acc GBP PKUV BDTYLF5 IE00BDTYLF50 - 0.16% 0.00% 0.00%   initial minimum investment   £1,000

[Deleted User]

ANGLICANPAT said:

 Damn, there's no Y or Z for my 3 fig multi million start then lol?  --Thanks dunstonh - forgot about that aspect , I hadnt checked out  as only for fun. Will still follow  out of curiosity .  

If your intention is lose money for fun, just buy lottery tickets. ESG funds, by definition, stray from the benchmark and narrows down your investment profile to companies selected by some criteria, either it be passively selected (some ESG ETF), or actively selected (actively managed fund which will have much bigger fees to pay). Either way, long term, you have great chance to underperform the benchmark, or at least have greater risk/volatility, because you decided to invest in some newest hype. Benchmark in this case be just FTSE All World for example.

ANGLICANPAT

ANGLICANPAT said:

 Damn, there's no Y or Z for my 3 fig multi million start then lol?  --Thanks dunstonh - forgot about that aspect , I hadnt checked out  as only for fun. Will still follow  out of curiosity 

Just had a quick look to see where I would find that aspect for quick future looking -  this info below under  Trustnets unit details seems the same fund id?    Is that £1000 only if one could find a platform to accept such a low start?  So confusing .
Federated Hermes Impact Opportunities Equity T Acc GBP PKUV BDTYLF5 IE00BDTYLF50 - 0.16% 0.00% 0.00%   initial minimum investment   £1,000

Oh I see, of course     initial has nothing to do with the  minimum amount  expected    !!!     

dunstonh

[Deleted User] said:

ANGLICANPAT said:

 Damn, there's no Y or Z for my 3 fig multi million start then lol?  --Thanks dunstonh - forgot about that aspect , I hadnt checked out  as only for fun. Will still follow  out of curiosity .  

If your intention is loose money for fun, just buy lottery tickets. ESG funds, by definition, stray from the benchmark and narrows down your investment profile to companies selected by some criteria, either is be passively selected (some ESG ETF), or actively selected (actively managed fund which will have much bigger fees to pay). Either way, long term, you have great chance to underperform the benchmark, or at least have greater risk/volatility, because you decided to invest in some newest hype.

Whilst I would agree with your historically in respect of Ethical investments I am not so sure about ESG.

It was well documented that going with an ethical fund meant you were likely to get lower long term returns. Indeed, advisers included a risk warning saying as much when dealing with ethical investments.       However, ESG is much broader than ethical and individual companies themselves are having to consider and position themselves in respect of ESG.

Currently, you have the choice to invest conventionally or with an ESG focus (forgetting ethical as that is old hat now).   There is an opinion that ESG will, over time, become the conventional way to invest as most companies will meet the ESG criteria to be included.

A portfolio of neutral investments (e.g. gilts) and ESG qualifying equities/bonds may not look a lot different from a conventional portfolio in the near future.  

dunstonh

ANGLICANPAT said:

 Damn, there's no Y or Z for my 3 fig multi million start then lol?  --Thanks dunstonh - forgot about that aspect , I hadnt checked out  as only for fun. Will still follow  out of curiosity 

Just had a quick look to see where I would find that aspect for quick future looking -  this info below under  Trustnets unit details seems the same fund id?    Is that £1000 only if one could find a platform to accept such a low start?  So confusing .
Federated Hermes Impact Opportunities Equity T Acc GBP PKUV BDTYLF5 IE00BDTYLF50 - 0.16% 0.00% 0.00%   initial minimum investment   £1,000

It is £1000 but the fee is negotiated with the investor on top of the OCF.  I cannot see a platform taking on a fund share class where each investor has to negotiate the fee with the fund house directly.

ANGLICANPAT

   quote  patient-investor      'If your intention is loose money for fun, just buy lottery tickets. '

 The lottery doesn't interest me so no fun there , but I would defo  get a buzz if  a generally unheard of fund   I picked as a phantom follow,  turned out to be a  BG Positive change  (by which time of course I would have jumped in for real lol)   In actual life though , for the bulk of my pf  Ill be getting a  well worn global tracker ! 

[Deleted User]

ANGLICANPAT said:

   quote  patient-investor      'If your intention is loose money for fun, just buy lottery tickets. '

 The lottery doesn't interest me so no fun there , but I would defo  get a buzz if  a generally unheard of fund   I picked as a phantom follow,  turned out to be a  BG Positive change  (by which time of course I would have jumped in for real lol)   In actual life though , for the bulk of my pf  Ill be getting a  well worn global tracker ! 

Sorry, I have trouble understanding you because of your writing style with errors everywhere. But I get it, that lottery is no fun and ESG is more fun. Good luck then.

Regarding lottery investing, I highly recommend "A Random Walk Down Wall Street", written by Burton Gordon Malkiel, it will show you how blindfolded monkey throwing darts can make better picks than majority of us out there.

ANGLICANPAT

    patient-investor  Thank you for the book recommendation.   Ah, sorry I can't alter my style of writing  or help my errors ,but I won't  loose   LOSE  sleep over it