Make the most of Ethical Investment Week - Top tips from unbiased.co.uk’s Media IFAs
With Ethical Investment Week starting on 8 November, unbiased.co.uk’s media IFAs give their top tips on what opportunities and options ethical investing presents to consumers and what they should be looking out for in the current market.
Gordon Bowden, Quainton Hills Financial Planning Ltd
“Remember that the normal rules of investing still apply when investing ethically. Use your tax allowances. Most ethical investments can be held within an ISA wrapper. Up to £10,200 can be sheltered from Capital Gains and Income Tax. Also most ethical investments can be held within a Self Invested Personal Pension (SIPP). Many ethical funds invest in the same companies so check that your combined holdings are suitably diversified. Finally remember that you are investing for a reason – performance matters!”
Danny Cox, Hargreaves Lansdown
“Climate Change Funds aren’t ‘green’. A climate change fund is likely to invest in a range of themes from solar and wind power to agriculture and hybrid cars. Green funds differ from a themed fund such as this as they adopt both positive and negative screening to ensure their ethical status. Climate change is a theme which requires a long-term view albeit the performance has been lackluster recently.”
Derek Capelin, Capelin Financial Management Limited
“Be absolutely clear on your objectives. What shade of green are you? Are you ethical, socially responsible, clean with your energy or ….? Are you a pro-active ‘positive’ investor or an avoiding ‘negative’ investor? Be prepared for your adviser; make sure you know your likes and dislikes and make sure your adviser asks you to complete an ethical questionnaire first. This will provide a foundation of mutual understanding, a reference point for your future discussions, and the basis for a more informative discussion. The more the adviser understands you and your ethical motivation, the better the recommendations will be.”
Ashley Clark, Need An Adviser.com
“There are many shades of green. Having Ethical or Green in the title may mean very little. Be mindful of so called ‘light green’ funds when compared to ‘dark green’ funds. Dark green funds usually mean they have high levels of screening where they positively exclude investing in certain areas such as tobacco, arms or pornography and positively discriminate to invest in energy efficiency technology or organic farming and the like. Many light green funds may invest in the ‘best of a bad bunch’ for example, if the fund manager has to invest in oil, he will select the most 'green' of the available oil companies, this is very light green. Check what shade of green your ethical fund is.”
Olivia Bowen, The GÆIA Partnership
“You can place your savings with ethical banks or building societies that only lend your savings to sustainable businesses, charities, or secure them against environmental buildings. These organisations remain financially secure compared to many other financial institutions, as they hold reserves in excess of the legal minimum, and have not invested in the securitised loans and the sub prime sector that have led other banks into ruin. Your longer term investments and pensions can be invested in a hugely diverse range of funds that focus on: environmental themes; sustainability; those with strict negative screens and those focusing on the positive inclusion of industries.”
Philip Pearson, P&P Invest Southampton
“When approaching ethical investment, the same principles apply to conventional portfolio construction. Remember to not put all your eggs in one basket and acknowledge the importance of the reinvestment of income. In the past ethical investment funds were heavily weighted towards Equities. With an ever increasing range of funds in this sector, it is now possible to create a balanced portfolio, across a broad selection of Asset Classes.”
Kevin Tooze, Equity Partners UK Ltd
“One has to take a serious look at the restrictions and screening associated with ‘Ethical’ funds when compared to the rest of the market. Are you keen to promote ethical trading or practices within companies? Are you protecting nature? Are you against arms and exploitation? Would you not be better just selecting the most successful funds and paying the profit directly to your chosen cause? Whatever route you finally choose seek independent financial advice at the outset.”
Mark Wapshott, St Edmundsbury FS Ltd
“As with all investments, performance is very important but more investors are now becoming aware of the on-going annual costs of an investment, especially those associated with active management. An alternative is the use of exchange traded funds (ETFs) with an index tracking vehicle link, which reduces charges and therefore the total expense ratio (TER). This passive management style, over the longer term can make a reduction to on-going costs which will therefore enhance the returns made, although as we know Ethical Investing is more than just the potential return.”
“Ethical investment can offer some interesting opportunities not just for people who are deliberately looking for a ‘green’ option for their money. However, so called ‘green’ investment choices can reveal a complex selection of choices along a wide range of the ‘green spectrum’. As there are many shades of green funds, you should speak to an independent financial adviser about what sort of ethical investment would work for you and best suit not just your own environmentally aware principles but also work with your existing spread of investments and asset allocation.
“Our ‘find an IFA’ search at unbiased.co.uk offers consumers the choice to search for an IFA near their chosen postcode by area of specialism – and lists ethical investments as one of the options available.”
ENDS
Karen Barrett, Chief Executive, unbiased.co.uk: 020 7833 3131
Anna Schirmer/Anna Moulds/Ellie Brooke, Lansons Communications: 020 7294 3682
For expert commentary or case studies from over 150 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook.
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