Ethical Investing

Ethical Investing Advisors in South Wales

Ethical investing refers to the practice of using one’s ethical principles as the primary filter for the selection of securities investing. Ethical investing depends on the investor’s views.

Ethical investing is sometimes used interchangeably with socially conscious investing; however, socially conscious funds typically have one overarching set of guidelines that are used to select the portfolio, whereas ethical investing brings about a more personalized result.

  • Ethical investing is the practice of selecting investments based on ethical or moral principles.
  • Selecting investments based on ethics offers no guarantee of performance.
  • Ethical investors typically avoid investments from sin stocks, companies involved with stigmatized activities, such as gambling, alcohol, smoking, or firearms.
  • Analyzing investments according to ethics should also include reviewing whether the company’s actions align with their commitment to ethics and their historical, current, and projected performance.

Understanding Ethical Investing 

Ethical investing gives the individual the power to allocate capital toward companies whose practices and values align with their personal beliefs. Some beliefs are rooted in environmental, religious, or political precepts. Some investors may choose to eliminate specific industries or over-allocate to other sectors that meet the individual’s ethical guidelines.

For example, some ethical investors avoid sin stocks, which are companies that are involved or primarily deal with traditionally unethical or immoral activities, such as gambling, alcohol, or firearms. Choosing an investment based on ethical preferences is not indicative of the investment’s performance.

To begin, investors should carefully examine and document which investments to avoid and which are of interest. Research is essential for accurately determining whether an investment or group of investments coincide with one’s ethics, especially when investing in an index or mutual fund. 

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Kelly was brilliant, she took a long look at what we needed and how best to achieve it in an socially responsible way and keep costs as sensible as possible!

Phil - Port Talbot - Sep 2020

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