As consumers, we’re continuously faced with decisions which reflect our lifestyle choices and personal values. We only have to walk into a supermarket to be faced with decisions such as buying Fairtrade bananas, organic meat or free-range eggs.
Ethical investing is no different, as it allows you to focus on organisations that make a difference, in the areas that are important to you.
The difference in styles
In the early days, Ethical investing was largely about avoiding companies that were considered to be unacceptable, such as those involved in armaments or tobacco, or those involved in the abuse of human rights and the environment.
Increasingly however, investors have realised that they have the potential to have a positive impact on the way in which companies operate, by using share ownership to engage with company management to improve the way they treat their employees, suppliers and the environment. It’s this latter, more positively focused approach, which is commonly referred to as Socially Responsible Investing (SRI).
Whilst this is great news for all of us, companies do not make these changes out of the goodness of their hearts! A business that considers its impact on stakeholders can also reduce legal and regulatory costs and even improve a company’s brand. Products that offer sustainable solutions to issues such as climate change, can also prove incredibly valuable.
Making a choice that is right for you
There is nothing more personal than who we are and what we believe in. As we’re all different, it’s important to select an SRI or Ethical Investment option that suits you.
We offer various Ethical Profiles which aim to cover the entire SRI and Ethical market, we will provide an Ethical Profile that’s right for you.
Could it involve taking more risk?
Ethical portfolios often have a lower weighting to sectors such as oil and gas or pharmaceuticals which means they behave differently compared to a traditional portfolio. The level of risk however, is primarily determined by your allocation to asset classes such as bonds, property and equities (shares).
Adopting an SRI approach may actually help to reduce risk, as it can highlight opportunities or risks that you may not have otherwise considered.
Our portfolios have been designed to suit a range of investor profiles with a different tolerance for risk. That way, we ensure an approach that is suitable for different investor preferences.
In this way, you stand the best chance of your investments resulting in a successful outcome.
Does it affect performance?
There’s no evidence of an SRI or Ethical portfolio underperforming the market; a fact which is supported by a raft of academic literature on the subject. SRI and Ethical portfolios do however behave differently to a traditional portfolio, as they typically have lower weightings to sectors such as mining, oil and gas.
There’s also a growing body of evidence that shows that the adoption of a more sustainable approach to management, may actually improve your portfolio’s returns. However, this may not always be the case.
Will I pay more?
SRI and Ethical funds typically have the same cost as any other Active fund, despite the additional layer of research involved.
There are even some funds which are cheaper than the wider market as fund managers recognise the rapidly growing demand from consumers in this sector.
Making a difference through your investment…
No investment is perfect because companies themselves are complex multi-national entities. You will always be able to find at least one issue with any company in which you invest. By engaging with these companies however, you can guide management towards sustainable solutions to real issues such as poverty, global warming and animal cruelty.
As pressure increases from consumers, investors and the government, the pressure on companies to act responsibly is increasing every day.
An intelligent approach to investing
Our service has at its heart a robust and proven process that is designed to consistently deliver results that are in line with investor expectations.
The focus is on delivering the best possible returns for an accepted level of risk, which is determined by a profiling exercise undertaken by us.
Portfolios are predicated on the principle of managing risk through diversification so we use a range of different investment assets such as shares and property to create a blend that offers the best balance of risk and reward.
We partner with SRI and Ethical experts, to ensure the portfolios are initially and continue to be appropriate for your values and preferences.
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Thanks, very interesting and very important. I had not given much thought to where to invest but this has a massive influence on the out come of the balance of money and responsibility to invest in fairness and the future