Can I switch my investment fund to ethical companies?

Tree of coins represented saving money and growing of business. Financial and banking concept

Ask the expert at Smith & Pinching about investing with socially accountable companies - Credit: Getty Images/iStockphoto

I inherited an investment portfolio worth about £250,000 from my father. It’s historically been invested in funds that give a good return, but I’m concerned that some of the funds involve companies that don’t have a good record from an environmental and ethical point of view. Is it possible to still get a good return if I change them to more socially accountable companies?

Phil Beck, Independent Financial Adviser with Smith & Pinching, Chartered Financial Planners

Phil Beck, Independent Financial Adviser with Smith & Pinching, Chartered Financial Planners - Credit: Smith & Pinching

Phil Beck of Smith & Pinching responds:

Ethical investing has become much more popular and mainstream in recent years so yes, it is possible to get investment growth using funds that invest in companies with good social, environmental and ethical credentials.

There is no need to compromise on the rate of growth either. A good ethical record may make a company more attractive to investors, whereas a bad record can adversely affect the performance of its shares. When choosing ethical investments, you can opt to target companies with a good record, or you can select what we call “hard exclusions” – specific sectors or industries that you want to avoid.

There is a wide range of ethical investment options that can suit different investors, whatever amounts they might want to invest and whatever their investment risk profile may be.

Many investors choose to invest via a managed portfolio. Managed investment portfolios contain a mix of assets that are aligned to a risk profile and monitored by specialist investment managers who will adjust the assets within agreed parameters, if necessary, to optimise their risk adjusted return. Our own S&P ethical model portfolios, managed by our investment management team, have been running since 2009 and have delivered proven growth to match our clients’ objectives within their agreed investment risk profile.

Alternatively, we can create bespoke ethical investment portfolios, for those with more specific requirements.

When putting together an investment portfolio, it’s important that you follow a strategy that allows you to achieve your objectives. Identifying what you want to achieve with your investments is therefore a critical first step before you move your investments around. It’s also important to establish what level of investment risk is comfortable for you. I think you would find it helpful to meet with an independent financial adviser to put together a financial plan that takes both aspects into account.

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Any opinions expressed do not constitute advice. The value of your investment can go down as well as up and you may get back less than the amount invested. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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