Pension-age investors ploughing money into climate change

Investors have poured more than £7billion into responsible funds, a 268 per cent spike compared with the same period in 2019

Pension-age investors are ploughing their retirement money into fighting climate change and exploring cutting edge technology, new research suggests.

The top ten funds bought by people aged 65-80 through Hargreaves Lansdown last month included two trying to make money from companies pursuing positive environmental and social change, and one specialising in automation and artificial intelligence.

Older investors are also showing an appetite for growth, value and emerging markets funds, all at the riskier end of the investing spectrum, according to the data from the UK's biggest online investing site.

The popularity of green or ethical funds among over-65s is part of a wider trend.

Investors have poured more than £7billion into responsible funds so far this year, a 268 per cent increase on the same period in 2019 and a new record.

Meanwhile, two major pension providers have announced plans to shift funds into climate-friendly investments and pursue carbon 'net zero' goals, citing overwhelming enthusiasm from savers, particularly the young.

This has prompted suspicion of some cynical bandwagon jumping, as major institutional investors feel pressure to support 'ESG' - environmental, social and governance - funds.

There is also scepticism that all this money will really go to companies making a genuine difference to the world, or just to 'greenwashed' portfolios with little real positive effect.

However, the Hargreaves data on older individual investors shows that this group are choosing funds trying to make an active impact on the environment and society, and keeping an eye out for opportunities in new technology as well.

Emma Wall, head of investment analysis at Hargreaves Lansdown, says: We're living longer, and our attitude to retirement is changing to reflect this. Investing in retirement used to focus solely on capital preservation, cash, gold and bonds, but today you want a bit of growth to make your money last the duration – equities.

How you allocate to equities in your portfolio in retirement depends on a number of factors, your attitude to risk, other assets, your estate plans and – according to our latest fund flows data – your morals, she said.

Wall said, there are two ESG offerings in the top 10 most bought funds for October among 65 to 80-year-olds, busting the myth that it is only the young that care about climate change. Also popular among retirees are a few cutting edge thematic funds, proving age is no barrier to engagement when it comes to your finances.