Are you an ethical investor with a social conscience?

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With the ISA season in full swing clients may be interested in ethical or socially responsible investing. This is an Investment philosophy which tries to balance the morality of a firm’s activities with a return on investment.  Ethical investment is usually through mutual funds or unit trusts and would typically be in firms which make a positive contribution to the quality of the environment and quality of life.

Ethical investing depends entirely on an investor’s individual views; you may choose to rule out certain industries entirely (such as gambling, alcohol, or firearms) or to favour industries which meet your own particular ethical principles.

Ethical investing often goes hand in hand with socially responsible investing.

Socially responsible funds typically have one overarching set of guidelines.  These are used to choose the portfolio, whereas ethical investing is more personal.

A good way to start with an ethical investing policy is to write down the areas you would like to avoid as well as where you want to see your money invested. From there you can come up with an asset allocation plan.

Independent Financial Advisers at Mark Hughes & Associates can help research individual securities and funds if you are an ethical investor, as well as assist with the development of a plan for a socially responsible portfolio.

Investors should keep in mind that “ethical” does not imply “outperform.”

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