More and more clients are becoming interested in ethical investments and with the TV constantly spitting out dramatic footage of our plastic littered sea’s, rivers being poisoned or reporting a steady stream of man-made disasters, we believe the demand will only increase for ethical investments in the coming years.
There is even a stock market index these days specifically to measure this type of investment, the “FTSE4Good” which could be selected by an investor as a tracker but generally ethical investments select companies to invest in using either positive or negative selection….
Positive selection is used by the fund manager to INCLUDE a specific share based on something the business actively does. For example, company X is included because they return 50% of their profits to charity every year.
Negative selection is used to EXCLUDE a specific share, for example company Y is an arms dealer and is specifically not included in the portfolio.
Some funds may also have very specific profile’s such as concerning itself specifically with green energy generation or re-cycling although this may leave an investor exposed to a single industry with little diversification. Other areas taken into consideration may be to exclude tobacco, arms manufacture or fossil fuel generation for example. Thought could also be given to a firm’s human rights record or the standards in its labour supply chain, however you can already see what a complicated area this can be.
As your local experts, we work with the entire market to select well balanced and expertly managed portfolio’s ensuring, where ethical investing is important to you, the performance of your investment or pension does not suffer. As always, the devil is in the detail!