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Whitechurch Blog: Can my money be used for good and still deliver strong investment returns?

3rd April 2020

INVESTING FOR GOOD - Can my money be used for good and still aim to deliver positive investment returns 

Many of us are used to the concept of donating to charitable causes close to our hearts, but actively investing in funds that are socially and environmentally responsible can still feel slightly alien for some. One of the questions our investment managers get asked increasingly is, “Can my money be used for good and still aim to deliver positive investment returns” we explore the answer to this question within this blog.

You’ll be pleased to know that the simple answer is a resounding YES and we will explain how, with just a couple of examples below. First off though, a brief explanation: An increasing number of people want to align their investment choices with their beliefs. There are a number of terms used to describe this type of investment such as Positive Impact, Ethical or Socially Responsible Investing (SRI). This type of investing is no longer just about excluding certain areas of investment; it now focuses much more on how people also want their money to be actively invested in a positive way.

To some, this may sound a bit idealistic with no opportunity for a return but that is a fading myth in the investment community. The world is changing and companies are constantly evolving, providing a wealth of opportunities in the SRI universe. Investing money in this space is increasingly providing opportunities to deliver positive returns as companies continually improve their working practices and environmental footprints to widen their appeal to investors. 

Many of the funds we include in the Whitechurch Ethical Investment portfolios have a thematic approach to identify key structural growth trends and long term, transformative developments such as Technological and Medical advancements. These forward-thinking themes not only have positive impacts on society and the environment but have significant potential to deliver attractive investment returns.

investing for good

Positive investing in practice

An example of this in action is the Liontrust Sustainable Future Global Growth fund. The management team has several key themes in place; such as enabling healthier lifestyles, increasing financial resilience and promoting active safety. This theme encompasses driving safety which in part looks at automatic electronic braking and forward collision warning.

The fund has invested in a major player in the smart mobility market which offers one of the largest range of smart sensors and features for enhanced automated driving systems. Whilst the company in question is aligned to a key theme it is not only analysed for financial return but to ensure that it scores well on environmental, social and governance factors within its operations. These include providing good employee benefits, work conditions and training and ensuring that it minimises negative environmental impact in its operations.

Environmental Impact

Thematic funds can be used to gain exposure to areas with good future growth prospects. An example of this type of thematic fund is the Pictet Water Fund. Water sustainability is a key issue, of the world’s total water supply only 3% is fresh water of which only 7.5% is useable. Shifts in rainfall patterns, steady disappearance of glaciers coupled with increasing demand lead to serious challenges in terms of supply. Focus is also turning to increasingly polluted water sources and the lack of sanitation infrastructure in many regions of the world. The Pictet Water Fund mainly invests in equities of companies providing water supply or processing services, water technology or environmental services.

Investing through Whitechurch

Ethical issues can be very subjective as what is important to one person will not be an issue to another. Whilst personal values may have common themes there can be significant differences in individual views. 

The Whitechurch range of ethical investment portfolios aims to address this issue through both negative screen - excluding investment in areas such as tobacco, arms, gambling and companies with poor human rights records - and a positive overlay - through the use of funds which look to invest in companies providing social and environmental good.

 

Are there any social, ethical or environmental issues you’d like to consider in your investments? If so, we can help you explore the options email: dfm@whitechurch.co.uk to speak to a member of our business development team.