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Ethical Investments

Alan Kirkham from Investing Ethically explains why we should be ... investing ethically

Of course as an investor, you will want to know your money is going to be working at least as hard in an ethical fund as it would in an ordinary one (I'm not allowed to say an "unethical" one.

The problem for the ethical funds is that over the last few years the real growth has come from the mining stocks - oil, iron etc. Ethical funds tend not to invest in these companies and so for a while we have not had the advantage these stocks have offered.

And the bad news doesn't stop there; recent research has shown that ethical funds do underperform, Exeter University said they underperformed by about 0.5%. Yet other research shows that the lower the social responsibility of the companies the greater the growth.

So why are we not throwing ourselves out of 20th floor office windows? Partly because we work in a sub basement office and it would be pointless to jump from there, but more importantly because sometimes you need to dig a little deeper into the research.

For example green investment tends to be a bit less volatile than other forms of investment: less risk = lower returns. In addition if you were thinking of investing now where would you rather be? Investing in shares that are soaring or in the companies that still have the potential for growth?

It is the underperformance of the funds that make them attractive. Oil and Gas are now so expensive one has to conclude that unless a company has a clear and sensible environmental programme then their performance has to suffer.

Ethical (or Socially Responsible) Investment is here to stay. There is over £5bn invested, it is attracting top quality managers, and remember last year we spent £25bn on ethical goods and services.

For the good of the earth and your wallet or purse I hope you join in.

Past performance is not a guide to future performance. The value of an investment in a unit trust can fall as well as rise.

(based on an article written by the finacial editor of the guardian for Jupiter Asset Management)

To find out more visit www.investing-ethically.co.uk or phone Alan on 01263 519006 or 07867 955336