Doing well while doing good

“Ethical investment, through positive results and changing attitudes, appears to be breaking into the mainstream.”

James Howard, director at Emerald Knight which specialises in socially responsible investment, says ethical investments don't have to mean compromising on performance.

Doing well while doing good

Doing well while doing good

“A big misconception about ethical investment is that you have to sacrifice performance in return for a clear conscience, when in fact the two can go hand-in-hand.

“And although it’s often considered to be a fairly recent phenomenon, the concept actually goes back hundreds of years when the Quakers banned members from investing in the slave trade.

“There’s no doubt however, that it’s gaining momentum. Figures from the Investment Management Association show the value of funds under management in UK-domiciled ethical funds has increased dramatically from £2.88bn in 2003 to £7.59bn at the end of last year.

“There are many reasons for this growth. The global economic downturn has resulted in a general lack of confidence in the banking sector, with Emerald Knight research showing that 80% of us now have less trust and faith in financial institutions. And around two thirds (65%) of us would like to know more about what banks do with our money.

“In addition, there’s evidence to suggest that recent industry issues such as the LIBOR rate-rigging scandal, PPI mis-selling and executive pay, together with consumer issues like climate change and human rights, have led to more people than ever reviewing options for socially responsible investment.

“But that doesn’t mean that people are prepared to sacrifice good investment sense. In many cases, ethical investments have, in fact, produced above-average returns. For example, the Ecclesiastical Amity International Fund recently won the prestigious Lipper award for best global fund over five years and has outperformed the global sector by 82.06% over the ten years to March 2013.

“And the Rathbone Ethical Bond fund has produced top-quartile returns in both one and three year time periods, outperforming its IMA Sterling Corporate Bond sector peers in the past five years by 2.48 percentage points.

“Ethical funds tend to hold a higher percentage of shares in small and medium sized companies, whose share prices can be more volatile than those of larger companies. But well-run companies with a strong ethical focus are a lot less likely to encounter problems their shareholders or regulators, or to face environmental issues.

“Over the longer term, therefore, they should be more likely to deliver the strong ethical fund performance required by today’s discerning investors.

“You can choose to invest directly into companies or projects which meet ethical criteria, or look at ethical funds which can be growth or income generated.

“There are several different types of projects to consider, from carbon neutral oil drilling investments to social housing projects in Brazil.

“It’s important to choose carefully however and to seek independent financial advice before making any decisions.

“Of paramount importance is to check the track record and previous results of companies or funds you’re interested in. And it’s important to ask if there are any independent sources providing proven success of their investments.

“For specific projects, you need to know if they’ve carried out robust due diligence checks, and in what way your capital will be protected.

“Ethical investment, through positive results and changing attitudes, appears to be breaking into the mainstream.”

Ethical Investment & Equity Release

What Is Equity Release?

Equity release is the use of financial arrangements that provide the owner of a house, or other property, with funds derived from the value of the property while enabling them to continue using it.

How Does Equity Release Work?

Equity release is aimed at homeowners aged 55 and over. It allows you to take some of the value of your home as cash.

Equity Release into Ethical Investment

Money itself is neither good nor bad. It is simply the means by which we exchange our skills, labor and material goods for those of others. However, money enables us to make choices, and the choices we make can have far-reaching effects.

When we look at the Social, Environmental, and Ethical issues facing our world today it is easy to feel powerless and insignificant, but that is far from the truth. We all have the ability to influence the future in a positive way, and by arranging your finances in concert with your beliefs you can certainly help to create a future in which you will enjoy living and one that your children will be proud to inherit.

Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.
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