Returning more than the global stock market while owning bonds is no easy feat. But the £3.3bn Royal London Sustainable World Trust has achieved just that, even beating the average global stocks fund manager.
Since launching in 2009 it has quintupled investors’ money, three times more than the typical fund that invests in bonds and stocks and well ahead of the 250pc return from the average global stockpicker.
Its manager George Crowdy, one of three investors in charge, revealed to Telegraph Money the secret of its success. He explained how the team picks stocks, the advantage of bonds and why inflation is not keeping him up at night.
Who is the fund for?
Investors who want to grow their savings, but with less volatility than the stock market. We achieve this by investing about 15pc to 20pc of the portfolio in bonds, which tend to perform well when markets go down. The rest is in stocks, which are the engine of the fund and provide the growth.
Every investment has to meet strict sustainability as well as financial criteria, so the fund also attracts investors who want their money to do good, as well as grow.
What is your investment strategy?
Any stock we buy has to have a positive impact on the world. This could mean making the world a cleaner, more inclusive and healthier place. They also have to treat every company they come into contact with in a responsible way, such as those in their supply chain. We won’t buy any company involved in harmful industries, such as tobacco, weapons, fossil fuels and pornography.
To meet our financial criteria, companies must be able to grow consistently, be excellent innovators and be able to adapt to changes in the world. The shares must also not be too expensive.
We own between 30 and 50 stocks, which isn’t that much, but have about 150 to 250 bonds. We look for high quality bonds, such as those issued by social housing companies where payments are backed by the government. This ensures we get our money back at the end of the bond, and the income.
