Taking control of your money is increasingly about making sure it’s invested in an ethical way. There are several good options for socially responsibly investors in the Irish market.
What’s ethical investing?
Ethical investing (or socially responsibly investing) comes in many forms, some more stringent than others. The common theme is a set of ethical principles which are about more than simply making money.
For example, many ethical investment funds refuse to invest in arms or tobacco.
Some have an environmental focus and shun oil and gas companies.
Other ethical investors focus on social benefits, such as avoiding alcohol stocks, or a commitment to high governance standards.
So there’s a wide variety out there to suit different tastes.
Good ethics can pay
Ethical investing can deliver strong returns.
Because the funds have avoided some traditional heavy industries, they often have an emphasis on technology, financial services and innovative sectors which have grown rapidly in recent years.
What’s out there?
One of the original investment funds in the Irish market is the Stewardship fund, run by Friends First. It has returned 7.1% per year on average since its inception in 1997, and 8.6% in the last ten years.
Since June of last year, it has been fossil-free, having sold all its oil and gas investments.
Some of its biggest investments are in Apple, Amazon, and Paypal. It owns stakes in water company Xylem, and financial companies Mastercard and Prudential.
Then there are other, more specialist ethical funds. New Ireland, for example, runs an alternative energy fund which focuses on investing in wind, solar and other renewable sources of energy. It also offers a fund specializing in investments in water supply companies.
Consider the balance
Because they are specialist funds, ethical investments typically don’t offer the diversity and relatively smoother performance of multi-asset funds.
If you’re set on investing through an ethical fund, it’s worth considering how to balance those investments with other asset classes.
Many of these funds are relatively small, and their performance can be more volatile than a larger fund holding lots of investments in many different industries.
So depending on your appetite for risk, for example, you could consider allocating some of your investment to a bond fund to balance your investment.
Talk to Moneycube today about the balance that’s right for you.