Socially Responsible Investment (SRI) and Ethical Investments

As consumers, we are continuously faced with decisions which reflect our lifestyle choices and personal values.

We only have to walk into a supermarket to be faced with decisions such as buying “Fair-trade” bananas, organic meat or free-range eggs.
Ethical investing is no different, as it allows you to focus on organisations that make a difference, in the areas that are important to you.

The difference in styles

In the early days, Ethical Investing was largely about avoiding companies that were considered to be unacceptable, such as those involved in armaments or tobacco, or those involved in the abuse of human rights and the environment.

Increasingly, however, investors have realised that they have the potential to have a positive impact on the way in which companies operate, by using share ownership to engage with company management to improve the way they treat their employees, suppliers and the environment.
It is this latter, more positively focused approach, which is commonly referred to as Socially Responsible Investing (SRI).

Our Approach

There is nothing more personal than who we are and what we believe in. As we are all different, it is important to select investment options that suit your personal goals.
At Atlas Financial Planning Ltd we can offer Ethical investments which aim to cover the SRI and Ethical market.

We will help you to pick an Ethical Portfolio that is right for you.

Could it involve taking more risk?

Ethical portfolios often have a lower weighting to sectors such as oil and gas or pharmaceuticals which means they behave differently compared to a traditional portfolio. The level of risk, however, is primarily determined by your allocation to asset classes such as bonds, property and equities.
Adopting an SRI approach may actually help to reduce risk, as it can highlight opportunities or risks that you may not have otherwise considered.

Ethical investment funds may offer a slightly higher risk due to restrictions in asset allocation, and particular markets. In other words, there is a more concentrated market in ethical investments.

Your portfolio can be designed to suit a range of investor profiles with a different tolerance for risk. With a choice of options, each with a specific mix of assets, we ensure there is an approach that is suitable for different investor preferences.

Does it affect investment performance?

There’s no evidence of an SRI or Ethical portfolio underperforming the market; a fact which is supported by a raft of academic literature on the subject. SRI and Ethical portfolios do however behave differently to a traditional portfolio, as they typically have lower weightings to sectors such as mining, oil and gas.

There’s also a growing body of evidence that shows that the adoption of a more sustainable approach to management, may actually improve your portfolio’s returns. However, this may not always be the case.

Will I pay more?

SRI and Ethical funds typically have the same cost as any other Active fund, despite the additional layer of research involved.

There are even some funds which are cheaper than the wider market as fund managers recognise the growing demand from consumers in this sector. If you have any questions about these options then you should contact us.