This month, Wealthify announced the launch of a range of ethical portfolios. It joins the growing ranks of UK robo-advisers (including Moola, PensionBee and Wealthsimple) which offer ethical investment options. Investors will be able to access the new ethical portfolios with as little as £1.
Ethical is big and trendy news – and Wealthify are unlikely to be the last company to go to market. Indeed, big guns in the asset management world are already are already making some serious noise in this space. LGIM recently launched The Future World Multi-Asset fund, a proposition that targets defined contribution (DC) schemes This is the latest addition to LGIM`s Future World fund range which also includes the Future World fund, a multi factor global equities index fund that factors in investment risks derived from climate change.
Ethic-o-sceptics are quick to point out the potholes on the road to virtue, citing that even the most vibrant of rose gardens will have the faintest aroma of fertiliser. One person’s ethical is not the same as another person’s ethical. Further to this we need to brace ourselves for more jargon.
Trouble is, we don’t live in a black and white world of nice polar bears versus evil people in pinstripe suits. What if a company produces oil but is investing in clean energy research, has a zero gender pay gap, pays above minimum wages and schools its workers’ children? Enter stage right a variant called ‘impact investing’, which loosely believes that you stand more chance of changing the world with a seat at the (boardroom) table, than waving placards from outside. Just this morning Burberry announced they will reversing their policy to destroy unsaleable items after shareholder pressure, a common practice in the luxury-goods industry to maintain brand exclusivity. The press release cites sustainability, but its hard to argue that shareholders were comfortable with the £29 million worth of goods being burned annually.
Continuing the theme of investing according to beliefs, last month also saw the launch of Wahed, a Shari'ah-compliant robo adviser. Termed Halal investing, it basically forbids investing in things that may cause harm to human beings or other elements of creation, for that matter - i.e. the environment. Banks, insurers, entertainment and alcohol companies are generally out, and there’s often a strong overlap with socially responsible investing. We have been hearing from consumers on how thrilled they are with this proposition. They believe it to have growth potential within their communities, which have traditionally been unengaged with traditional investment solutions.
Our latest report aims to delve into this new market. Where do consumers stand on issues of ethics, social and governance when it comes to their own investments? Where do they draw the line between morals and acceptable returns? Research is underway and we will be launching the report on the 18th of October – please contact us to secure your place at our free breakfast briefing.