ii ACE 40 performance review: Q1 2025
Here’s how interactive investor’s sustainable funds performed in the three months to the end of March.
11th April 2025 11:50
The relative strength of equities in Continental Europe and the UK versus the weakness seen in the US and Asia ex-China explains much of the relative performance of funds on the ACE 40 over Q1 2025.
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EdenTree Responsible and Sustainable European Equity fund topped the outperformers’ list with a gain of 8.6%. The fund adopts a contrarian, value approach and focuses on stocks that are out of favour, are more cyclical by nature, or are undergoing what are deemed to be temporary difficulties. Positive environmental, social and governance (ESG) screening is also employed. The value bias was beneficial over the quarter, with the overweights to financials and communications services, and underweights to IT and consumer discretionary adding value. In addition, there was strong stock selection within financials.
The other European equity fund on the outperformers’ list is M&G European Sustain Paris Aligned, which posted a return of 2.67%. The underlying stock selection approach employed here has a focus on companies showing sustainable competitive advantages and this results in a growth bias, however, the concentrated portfolio can result in returns to stock selection can overcome style biases at times. Over the quarter, the fund’s positioning at the sector level provided a positive (underweight to IT and consumer discretionary and overweight industrials and communication services), while the growth-biased stock selection was a negative and resulted in the fund underperforming mainstream indices.
With a return of 3.75%, the Schroder Global Sustainable Value Equity also makes the top five outperformers’ list. The fund offers both sustainable characteristics and a clear value bias relative to mainstream benchmarks and this helped returns over the quarter. There is a focus on companies deemed to be industry leaders or best in class vs peers in terms of sustainability, while the underlying stock selection methodology follows the established team process that seeks to identify contrarian, recovery ideas with strong financials. The underweight to the US and overweights to Europe and the UK contributed to the outperformance seen versus mainstream benchmarks.
The remaining two funds with positive returns provide UK equity exposure. UBS ETF MSCI UK IMI SRI GBP A dis (LSE:UKSR)tracks the MSCI UK IMI Extended SRI Low Carbon Select 5% Issuer Capped Index and produced a return of 3.3%, while Janus Henderson UK Responsible Income returned 2.5%. Both funds were hampered by a lack of large-cap exposure resulting from their ESG criteria.
At the other end of the list, Polar Capital Smart Energy saw a negative return of just over 12.9%. This alternative energy fund is managed by Thiemo Lang who has more than two decades of relevant experience. The investment process focuses on bottom-up selection of quality-growth companies that trade at reasonable valuations and provide solutions that enable the decarbonisation and electrification of the global energy sector. High exposure to the technology sector is a notable feature of this fund and this was a significant negative over the quarter.
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With the US market underperforming over the quarter, theBrown Advisory US Sustainable Growth appears on the underperformers’ list with a negative return of 12.7%. The managers of this fund incorporate sustainable investing traits into their long-term fundamental research process, which focuses on identifying sustainable business advantages. The resulting growth style bias was not beneficial over the quarter and contributed to the underperformance seen versus the mainstream S&P 500 index, with weak stock selection in the IT, healthcare and communication services sectors.
US equity weakness also impacted two other funds. The iShares MSCI USA SRI ETF USD Acc GBP (LSE:SUUS)posted a loss of 9.85%, slightly behind the mainstream S&P 500 index. This passive fund invests in a sub-set of equities within the MSCI USA Index that demonstrate higher ESG ratings than other sector peers, as well as excluding companies involved in controversial businesses such as weapons, thermal coal, tobacco and oil sands.
The high US exposure in the UBS(Lux)FS MSCI World SRI USD Adis GBP (LSE:UC44) contributed to a loss of 8.83%. Underperformance versus the mainstream MSCI World Index reflected the overweight IT and underweight energy and utilities sector allocation. The fund tracks the MSCI World SRI Low Carbon Select 5% Issuer Capped TR Index.
The final fund on the underperformers’ list is an investment trust, Pacific Assets Ord (LSE:PAC). In share price terms, the fund saw a negative return of 10.81% with slight discount widening exacerbating the -8.5% NAV return. The fund underperformed mainstream indices and attribution versus the Morningstar Asia ex-Japan TME Index shows the longstanding underweight to China and weak stock selection in India as the main culprits. Despite the short-term weakness, the medium and longer-term track record of the trust remains strong.
Top five ACE 40 funds in Q1 2025
| Group/Investment | 3 months | 1 year | 3 years | 5 years |
| EdenTree European Equity | 8.58 | 7.71 | 30.45 | 103.76 |
| Schroder Global Sust Val Equity | 3.75 | 6.19 | 21.13 | 78.32 |
| UBS ETF MSCI UK IMI SRI GBP A dis (LSE:UKSR) | 3.33 | 10.65 | 15.88 | 54.46 |
| M&G European Sustain Paris Aligned I Acc | 2.67 | 0.69 | 34.45 | 90.63 |
| Janus Henderson UK Responsible Income | 2.46 | 3.76 | 16.68 | 62.64 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2025. Past performance is not a guide to future performance.
Bottom five ACE 40 funds in Q1 2025
| Group/Investment | 3 months | 1 year | 3 years | 5 years |
| Polar Capital Smart Energy I Acc | -13.00 | -6.95 | 0.98 | |
| Brown Advisory US Sust Gr GBP B Inc | -12.71 | -4.73 | 20.00 | 101.07 |
| Pacific Assets Ord (LSE:PAC) | -10.81 | -4.97 | 6.86 | 60.21 |
| iShares MSCI USA SRI ETF USD Acc GBP (LSE:SUUS) | -9.85 | -1.84 | 15.20 | 99.75 |
| UBS(Lux)FS MSCI World SRI USD Adis GBP (LSE:UC44) | -8.83 | -1.61 | 18.12 | 84.06 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2025. Past performance is not a guide to future performance.
Top five ACE 40 funds over five years
| Group/Investment | 3 months | 1 year | 3 years | 5 years |
| EdenTree European Equity | 8.58 | 7.71 | 30.45 | 103.76 |
| Brown Advisory US Sust Gr GBP B Inc | -12.71 | -4.73 | 20.00 | 101.07 |
| iShares MSCI USA SRI ETF USD Acc GBP (LSE:SUUS) | -9.85 | -1.84 | 15.20 | 99.75 |
| Wellington Global Stewards GBP N Acc | -4.91 | 0.51 | 26.11 | 98.12 |
| M&G European Sustain Paris Aligned I Acc | 2.67 | 0.69 | 34.45 | 90.63 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2025. Past performance is not a guide to future performance.
Bottom five ACE 40 funds over five years
| Group/Investment | 3 months | 1 year | 3 years | 5 years |
| Amundi Glb Aggt Green Bd ETF Acc GBP (LSE:CLIM) | -0.01 | -0.03 | -5.56 | -14.90 |
| PIMCO GIS Global Bond ESG Instl GBPH Inc | 1.64 | 4.67 | 2.94 | 4.15 |
| CT UK Social Bond Z Grs Acc£ | 1.25 | 3.92 | 4.19 | 6.62 |
| Liontrust Sust Fut Corp Bd 2 Grs Inc | 0.78 | 2.20 | 0.72 | 7.27 |
| VT Gravis Clean Energy Income C GBP Acc | -0.92 | -2.96 | -29.32 | 8.92 |
Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/03/2025. Past performance is not a guide to future performance.
Most-bought ACE 40 funds in Q1 2025
Most-sold ACE 40 funds in Q1 2025
Changes to the ACE 40 list (under review/developments)
None in Q1.
ACE 40 videos in Q1
None in Q1.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
The ACE 40 investments list is selected and managed by our independent research partner Morningstar and reviewed by our in-house investment experts to help narrow down the wide choice of available investment products. We believe it represents a set of high-quality choices, across different asset classes, regions, and investment types.
However, you should note that the selection of ACE 40 investments list is not a ‘personal recommendation’. This means we have not assessed your investment knowledge, your financial situation (including your ability to bear losses), your investment objectives, your risk tolerance, or your sustainability preferences.
You should ensure that any investment decisions you make are suitable for your personal circumstances, and if you are unsure about the suitability of a particular investment or think you need a personal recommendation, you should speak to a suitably qualified financial adviser.
The past performance of an investment is not a reliable indicator of future results, and ii does not guarantee or predict the future performance of the ACE 40 investments list as a whole or the constituent investments.
Risk Warning(s)
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Investing in emerging markets involves different risks from developed markets, in many cases the risks are greater.
The value of international investments is affected by currency fluctuations which might reduce their value in sterling.
Disclosure(s)
All funds listed are the Accumulation version of the fund, where available, where any income generated within the fund is reinvested automatically. Income versions of these funds may also be available for investors looking for income generated to be paid directly into their account.
Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.
Any changes to the ACE 40 investments list and the rationale behind those decisions will be communicated through the Quarterly Investment Review.
Details of all ACE 40 recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Members of ii staff may have holdings in one or more ACE 40 investments, which could create a conflict of interest. Any member of staff involved in the development of research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, staff involved in the production of the ACE 40 investments list are subject to a personal account dealing restriction. This prevents them from placing a transaction in the specified instrument(s) for five working days before and after an investment is included or amended and made public within the ACE 40 investments list. This is to avoid personal interests conflicting with the interests of investors in the ACE 40 investments.