| As with most of the financial services industry, | | | | the financial services industry which would struggle |
| the need to be cynical with ethical investing is | | | | with such an educated choice. |
| encouraged. The minute we were told that gases | | | | A fund manager's role is simply to look at all the |
| from our fridges were hurting the environment | | | | best stocks in the market and buy them and |
| our bank accounts began the unleashing of the | | | | make you money. You invest 'x' and achieve a |
| taxes the like of which we have never seen | | | | spread across a wide range of stocks and shares |
| before. Easy come. | | | | that you would not normally be able to. Of course |
| To speak out about green or ethical investments | | | | you have no way of knowing if each of the |
| is seen to be inappropriate. 'Why would you not | | | | 60-100 stocks you have, all match your criteria of |
| want to protect mother nature' is the general | | | | 'ethical' or 'green' so you rely on the trust deed of |
| tune, and so those with any wealth, or a car that | | | | the investment manager which will detail that. |
| matches that, will feel the wrath of simplified, but | | | | Funds will positively screen or negatively screen |
| effective marketing that governments have | | | | stocks. Positive screening focuses on companies |
| applied. | | | | developing alternative resources or technologies |
| Whether or not you believe in global warming or | | | | which will result in a lesser impact on the |
| climate change is a separate argument, one which | | | | environment. They will also screen to look for |
| you might find very interesting, but this article will | | | | companies that support appropriate social issues |
| not cover that. However, a trip to iceagenow or | | | | such as fair payments for services or goods in |
| climateaudit, and a few hours reading, coupled | | | | disadvantaged countries or education. |
| with the fact that no real improvements or | | | | Negative screening looks for companies that are |
| investments by global governments in the | | | | involved in 'things we wouldn't call moral, just or |
| essential infrastructure have taken place in the | | | | fair' such as armaments, tobacco, pornography, |
| last six years, despite the need, will leave you | | | | animal testing, avoidance of alcohol for example. |
| much more balanced than you may currently be | | | | Some of the screening is very strong and |
| thinking. | | | | focused whilst others are not and you should |
| It is the dishonesty of some organisations in | | | | make it clear to the financial adviser giving you |
| constantly filling our heads with inappropriate data | | | | investment advice what your key criteria is. It is |
| in search of their own profit that has been the | | | | not unknown for example, for a fund to screen |
| cause of increasing cynicism - It is just as easy | | | | against pornography but not against armaments. |
| for some to prove global cooling and the reason | | | | Your choice of fund however, should look closely |
| for it, as it is for others to prove climate change | | | | at the management style of the manager, their |
| (interestingly used to be called global warming) and | | | | focus and costs, whilst comparing the fund |
| the reason for it. | | | | performance - which you will find very interesting. |
| Either way, there is no doubt whatsoever as a | | | | Aberdeen Ethical world for example is arguably |
| world that we are wasteful with our resources | | | | the best global fund; yet its return over the last |
| and cannot continue with that in any measure of | | | | year is 4th decile in a sector where it is |
| sustainability so I'll leave the above melting pot | | | | compared against unconstrained investments.(1) |
| aside for another time as I focus on which funds | | | | Its risk (measured by standard deviation) is 10th |
| you may consider. | | | | decile (worst) and its Sharpe ratio (basically the |
| To choose the better funds you might need to | | | | potential for return and is it worth that risk) is 7th |
| consider how they choose what to invest into. | | | | decile. |
| Ethical is a broad term, which, if we look at a | | | | If this is the best global fund, ethical investors |
| thesaurus, means principled, moral, fair or decent. | | | | need to be aware how much bang they are really |
| That would be good enough criteria for me to | | | | getting for their buck. |
| invest into a fund but would be a bit vague for | | | | |