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Ethical investment improvements needed on fund platforms

25 October 2010 / by Paul Dicken

Ethical and sustainability issues are not ‘widely integrated’ on investment fund platforms and there are barriers to smaller funds attracting investors in this way, according to new research.

A report by Julia Dreblow of SRI Services, for the UK Sustainable Investment Forum (UKSIF), found green, ethical and sustainability issues are not widely integrated in the way platforms operate making such investments less likely to be visible on platforms, while aspects such as model portfolios can favour large funds.

The report said: “Guided architecture and services such as portfolio planning and model portfolios may reduce the likelihood of anything but the largest funds enjoying substantial support.”

The report said smaller fund managers faced different challenges to more established managers with revenue levels and fund inflows required by the three largest fund platforms hard to achieve, while being liked to a high number of platforms was ‘administratively challenging’.

Identifying platforms and wraps (accounts allowing the management of various investments) as an increasingly important way to distribute funds and investments, the report said the anticipation amongst platforms that they will become more active in ethical investment needed to be made into a reality and ‘meaningful business decisions’.

UKSIF chief executive Penny Shepherd said: “National Ethical Investment Week next month is a great opportunity for platform and wrap providers, financial advisers and wealth managers to explore green and ethical investments with their clients.

“This should accelerate the development of advice tools that support modern mainstream clients that want to make money and make a difference in their investments choices.”

© Fair Investment Company Ltd