Page 35 - DIY Investor Magazine - Issue 26

But some platforms have introduced responsible investment ratings which can help investors find the right fund.
Ratings offer some guidance on how much good your money will do, or how closely the fund sticks to its promise to invest responsibly.
Interactive Investor, the UK’s second largest retail investment platform, launched ‘ACE 30’ in 2019 – its best-in-class list of ethical funds, ETFs and investment trusts. It has recently been boosted to the ACE 40 with 10 new funds added.
The Big Exchange is a new DIY platform supported by the Big Issue that only offers funds that have a social or environmental impact. Read our review here.
Elsewhere, EQi (previously Equiniti) displays ratings by independent research firm Square Mile, (instead of ratings compiled in-house) according to how funds take into account ESG factors.
Roboadviser Nutmeg offers a range of socially responsible portfolios, and ESG scoring for all Nutmeg portfolios. Each category is scored from 0-10, where a higher score signifies better adherence. Nutmeg this week reported that these portfolios are the fastest growing investment style in the business.
Nutmeg isn’t the only robo with ethical investments; there is also EQ Investors, Wealthsimple, Plum, Tickr and Wealthify to choose from.
BUYER BEWARE
ESG has become a powerful marketing tool and so hidden among the genuine ESG investments lurk ploys that use ESG to sugar-coat bad practice — a practice known as ‘greenwashing’.
understood so it’s important to drill down to the details of how your money is invested, rather than just relying on the name of the fund.
The Investment Association has recently published guidance for fund companies which aims to bring clarity and consistency to investors on the approaches they take to responsible investment.
COMING SOON
Rishi Sunak, the chancellor of the exchequer, said the government would issue its first ever green gilt next year to ‘meet growing investor demand’. He said it would be the first in a series of new issuances.
Money raised by the bonds will be used to help fund projects to tackle climate change, build infrastructure investment and create ‘green jobs’ across the UK.
When launched, if the bonds are available to retail investors
– and can offer a more attractive rate than deposit accounts — they could prove a hit.
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It’s a must to check under the bonnet of these funds to make a call on whether they really do what they say on the tin.
All investors should find out what is in a fund’s portfolio. For ESG investing, seeing a full list of holdings is the only way to check exactly where your money is going.
Equally, there is a great deal of ambiguity and inconsistency in how responsible investment terminology is used and
35 DIY Investor Magazine | Dec 2020