Quick Links

Investing in Ethical Funds

Investing in ethical funds is becoming more and more popular with investors and not just those who wish to take a socially responsible approach to investing. Indeed, even investors who would not consider themselves to be "green" are recognising that there are real growth opportunities in companies that operate in areas that are likely to benefit from the fight against global warming, for example, companies involved in renewable energy and clean public transport.

There are generally two types of ethical funds:-

The first are known as "light green" and will generally avoid companies that gain a large proportion of their revenue from the operation of certain industries, for example, animal testing, pornography, tobacco and arms.
The second type of ethical fund is known as "dark green" and takes a much stricter approach to the types of companies that it invests in. Generally, these types of funds will actively seek out those companies making a positive contribution to the environment and its people, such as renewable energy and clean transport.

By their very nature, light green funds will tend to invest in larger companies whereas a dark green fund is likely to invest more in small and medium-cap companies in less established markets and, consequently, is likely to be more volatile.

You can gain access to ethical investment funds via pension schemes, unit trusts, investment trusts, investment bonds and opened investment companies. Some funds will invest on a global basis whilst others will be predominantly UK orientated. It is possible to invest in shares or fixed interest securities or a combination of the two, with some funds aiming to provide an income whereas others will target capital growth.

It is important that when considering ethical investment, you seek impartial financial advice from a specialist who will be able to analyse your overall circumstances and choose the most appropriate ethical fund for you taking into account your objectives and attitude to investment risk.

Please note that the value of your investment and the income from it can fall as well as rise and is not guaranteed. You may not get back the full amount invested.