I’ve an investment portfolio worth about £200,000 that I’ve built up over the years. I have quite a wide range of investment funds in it, but I’ve become aware recently that there are some real “bad-guys” in the mix – tobacco, gambling and a couple of serious polluters. I want to overhaul my holding to have a much more ethical position but I’m worried it will seriously affect how well my portfolio will do overall. Can I invest ethically and still see my investments perform well?
Carl Lamb replies
Yes, you most certainly can opt for ethical and sustainable investments and still see performance to rival less ethical funds. In fact, in recent years, some ethical funds have outperformed traditional funds and, according to Royal London, have proven to be less vulnerable to market falls in during the COVID-19 crisis.
ESG Investments (Environmental, Social and Governance) is the term we use in the financial services sector to describe investments that support companies who have a transparent and positive attitude to the planet, their staff and their business practices. The available funds vary hugely and a suitable portfolio can normally be built for every type of investor, whatever their preferences, attitude to investment risk and investment amount.
It is also possible to opt for a managed investment portfolio that uses just ESG investments. Managed portfolios put together a mix of investment assets and are built to align with specific investment risk profiles. They are adjusted on a regular basis by investment managers, within the agreed parameters, to meet or exceed a benchmark. Our own range of ethical managed portfolios has been running for over seven years and has delivered proven growth to match our clients’ objectives within their agreed investment risk profile.
I suggest you meet with an independent financial adviser to review your investment strategy. Diversification, investment management and matching investments to your investment risk profile should all be important elements of your strategy, whatever your investment priorities may be. Now may be the time to make significant changes to your portfolio but markets are still turbulent so it’s important to manage those changes to ensure you aren’t locking in losses as markets rise and fall.
Any opinions expressed in this article do not constitute advice. The value of your investments can go down as well as up and you may get back less than the amount invested.