The biggest danger when it comes to launching an ethical or ESG fund is investors that try and achieve a one-size fits all approach.

That is according to Rathbones’ Bryn Jones, who manages the Rathbone Ethical Bond fund at the firm.

'The issue that arises around green washing is that what is ethical to me, might not be ethical to someone else, or they might have a specific view on a sector,' he told Citywire Selector.

Citywire A-rated Jones said there is a massive difference in attitudes as to what is ethical and sustainable and highlighted the importance of different views encompassed within a portfolio.

'There are different levels of sustainability in a fund and that is what’s important. A certain strategy might be green washing for someone who is really into social impact, but for someone else, it’s an endowment and more suitable.

'What we really need to understand is this green washed label that has been lobbed on a lot of funds as various houses issue new products,' he said.

Jones said one of the main reasons there has been an uptick in the launch of ESG/SRI style funds is due to changing investor sentiment.

'When I first started managing ethical bond funds it was hard to even get in front of investors, people just used to screen them out. Now they are screening them in because they are seeing the importance of these types of funds.

'Investors' attitudes have changed. You tend to find that people that have been educated from 1990 onwards are starting to realise that there’s a big impact on the environment for their children and for the rest of society.'

Jones said investors are getting savvier as to where they want to invest and are investing in strategies that impact their lives directly.

‘Cancer might have impacted their lives so they don’t want to invest in alcohol or tobacco companies. They could be concerned about vehicles, whilst some might not be bothered about that and are more focused on the social impact of people coming out of prison.

‘Investors aren’t interested in investing in a certain consumer discretionary stock because they have ethical supply chains, they want something that has a massive impact,’ he added.

Over the one year to the end of February 2018, the Rathbone Ethical Bond fund returned 5.32% in sterling terms. This compares with a 1.39% rise by its Citywire-assigned benchmark the Markit iBoxx Sterling Corporates TR, over the same time period.