WITH A wide range of options in the Irish market for investors looking for ethical and sustainable choices, it might take some time to find the right fund for you.
As everyone has their own opinions when it comes to deciding what’s ethical or not, Julie McDowell recommends that you check the specific criteria of the fund when choosing an ethical investment to make sure that its values match yours.
While most people would agree to exclude companies that violate human rights or damage the environment from their fund, the choices are not always so clear-cut.
Standard Life’s funds, for example, also screen against companies which derive more than 10 per cent of their turnover from marketing breast milk substitutes or genetic engineering, which many people might consider to be acceptable activities.
Some years ago, a ethical fund in the United States refused to invest in companies making contraceptives, apparently in a pitch at securing funds from conservative religious investors of varies hues.
Regional cultural differences also can play a part. The industry has been dominated by the cultural sensibilities of the western Christian markets where such funds initially emerged. But those values might not be mirrored by funds based in Asia or the Middle East and vice versa.
So, before you write that cheque, make sure you are happy with the aims of the fund.
The increasing demand for sustainable investments which are linked to the environment has also led to a rise in the number of such products available.
Rabodirect has just made three new funds managed by Sustainable Asset Management and focused on smart energy, water and climate change, available to Irish investors, while KBC Asset Management also offers water and alternative energy funds to retail investors through New Ireland.
In addition, Dolmen Stockbrokers has its Green Effects fund.
Investors can access an ethical or sustainable fund from as little as €100 with Rabodirect, although some funds, such as AIB’s Ethical Balanced Growth Fund requires an investment of at least €10,000.
Fees also differ considerably from fund to fund, with Friends First’s Stewardship fund one of the most expensive in the market in terms of annual management fees, charging 2.875 per cent.
AIB’s Ethical Balanced Growth Fund is one of the best value funds, with an annual fee of 0.75 per cent and no allocation rate, encashment charge, up-front fees, or bid/offer pricing.
If you would like an index fund, Irish Life’s Ethical Global Equity tracks two ethical indices, the FTSE4Good Europe 50 Equities Index and the FTSE4 Good Global 100 Equities Index.
Managed funds, which invest in a range of asset classes including equities, cash, bonds and property are also available to Irish investors. Examples include AIB’s Ethical Balanced Growth Fund and Bank of Ireland’s Ethical Managed Fund.
Another option is to invest in an exchange traded fund (ETF), which lists on a stock exchange and which can be bought via a stockbroker.
ETFs available to Irish investors include the ETFs DAXglobal Alternative Energy Fund, which is listed on the Irish Stock Exchange.
