I want to invest in ethical investments only. Is there any real evidence that you can get good (or at least equal) returns via ethical investments – or is this really just a charity thing to make us feel better? Do advisers have access to some sort of list of ethical investments that they can recommend for someone like me?
Top answer provided by:
Peter Nonnenmacher
Many years ago when ethical funds were introduced they appeared to me to be not very popular due to their specialised nature and limited investment scope. This in part was due to the fact that the average investor did not demand for these types of investments and there were not many to choose from. Over the years this philosophy has developed and now there are many ethical style or “social responsible investments” available in the market place and this is in part due to the increase in popularity by the general public, the increase in awareness of being socially responsible and simply a sensible way to invest.
As one fund management group, AMP Capital explains:-
“The Responsible Investment Leaders range of funds (“RIL Range”) has a long-term investment strategy recognising that broader environmental, social and ethical considerations, labour standards and corporate governance factors can impact long-term business success. The RIL Range will invest through managers or in funds which have a demonstrable process for taking these matters into account. Managers will be selected based on their investment credentials and process, and their ability to factor broader environmental, social and governance factors into security selection. While investment assessment is the primary consideration, there is growing evidence that environmental, social and governance factors can give insights into a company’s intangible assets, sustainability and long-term market valuation.”
Put simply, there is more and more emphasis placed on businesses to be more responsible to the environment, be it pressure from State and Federal government and particularly local government. Businesses need to be “green” in so many aspects on how they do business. These requirements ensure the sustainability of the business and also increase the attractiveness to investors for their long term sustainability.
The performance of these ethical and socially responsible style of investment funds are now more mainstream and the performance is in line with other investments within the asset group they are involved, be it domestic equities or international equities. In multi manager style funds, these are now also becoming more popular.
Most financial planners will have a library of ethical funds within their approved product lists and these can add to the normal diversification of a sensible portfolio. However, it would be prudent to highlight to your financial planner your preference to have these types of investments included in your portfolio, as it may not be the adviser’s initial inclusion unless you, the client have advised your specific preference for an ethical or socially responsible fund.
Yours sincerely
Peter Nonnenmacher
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Comments2
"Thankyou both for great information. It so good to read these options are becoming more mainstream. Keep up the pressure!"
Wendy 15:26 on 16 Jun 17
"Ethical investing would be so much more attractive if the true costs of externalities like pollution were priced into our economic system. Ethical investing should be encouraged somehow - not penalised with higher management fees."
Andy Aigis 15:23 on 16 Jun 17