WE ALL know the reason why countless people turn to investment funds every year: to give their cash a chance of growing at rates that would never be possible in any kind of savings account.

But do you ever think about what happens to your money once you have handed it over to a fund manager – and do you care?

If research from ethical bank Triodos is anything to go by, a growing number of investors is taking a greater interest in where their money is invested, with many keen to see their cash make a positive impact in the world at the same time as actively counteracting the effects of everything from climate change to financial unrest and fossil fuels.

The study, which surveyed over 2,000 people, found that just over half (55 per cent) want their money to support companies that contribute to society and the environment while 69% would like to have more knowledge and transparency about where their money goes.

Bevis Watts, UK managing director at Triodos, said: “Demographic changes, social media and awareness of the challenges facing our planet mean that investors are waking up to the fact that there really is no such thing as a neutral investment.

"Every investment has an impact on individuals, society and the economy.”

Given the increased awareness, Triodos believes that more and more investors will start putting their cash into funds with an ethical focus and expects the UK market for socially responsible investing to grow by 173% to reach £48bn in the next decade.

The bank said that growth in the sector will be driven by a “socially conscious group of young investors”, with just under half (47%) of those in the 18 to 34 age group that took part in its impact investing study saying they planned to make an ethical investment.

This trend was also picked up by banking group Barclays, whose own impact investing report found that while 43% of investors under the age of 40 had made an impact investment during their lifetime, just 9% of those aged 50 to 59 and 3% of those over 60 had.

According to Barclays’ impact investing head Damian Payiatakis the anomaly is down to younger generations being “more naturally comfortable combining financial and societal ambitions when investing” than older ones.

Meanwhile, while older investors may be interested in seeing their investments do some good, Mr Payiatakis said it may take time for them to achieve that if they have existing investments to unwind.

“Older individuals and families are likely to have been investing over a longer period and have existing portfolios to evolve to align their investments with their intentions,” he said.

Despite this, David Thomson of Glasgow-based advisory business VWM Wealth, said that people of all ages are showing a greater interest in investing their cash in businesses that have a positive impact on the world, with the reaction to television programmes like David Attenborough’s Blue Planet – which last year revealed the devastation plastics are causing to our seas - having an influence on their thinking.

“The whole ethical area has been an interest of mine for the last 25 to 30 years and what I’ve noticed is that it does now seem to be of more interest to more people,” he said.

“In the past it was presumed that you would have to give up investment returns to be more ethical but in practice that was never the case.

"What you tend to do is increase your risk by narrowing your universe – you’re not investing in very safe tobacco stocks – but that was also increasing the level of return.”

Liontrust’s UK Ethical Fund, for example, has returned 67.2 per cent over the past five years while the average fund in the Investment Association’s UK All Companies sector has grown by 44.1%.

Standard Life Investments’ European Ethical Equity Fund, meanwhile, performed in line with the average Europe excluding UK fund, returning 61% over five years against an average of 62.3%.

Anyone looking to go down the sustainable route will have to be clear on what their investment criteria is and seek out their investments carefully, though, with Mr Thomson pointing out that some impact investors will actively avoid buying arms, gambling or tobacco stocks while others will take positions in a wider range of companies but try to use their influence as shareholders to drive positive change from within.

As Mr Watts at Triodos said: “The socially responsible investing market is growing quickly but we must be careful that it isn’t just labelled as sustainable investment on the surface otherwise it might come down to just doing things slightly less badly.

"A best-in-class investment in the tobacco or arms sector is not going to help make our society more sustainable.”