Best ethical ISA investments
Many of us would like to believe that our choice of investments could make a positive contribution to society and the environment -- as well as provide good returns. Ethical funds offer us the ability to do this, and if they come in an individual savings account (ISA) 'wrapper', then even better. This way, you can also make a tax saving on the returns.
The difficulty comes in finding a fund that suits your particular principles and performance criteria. After all, there's a huge array to choose from, with over 90 different ethical funds which can be popped in an ISA wrapper on the market.
Some aggressively screen out polluters, arms companies and animal testers, for example, while others search for companies that are working to help the environment, such as sustainable energy or recycling companies. The Norwich Union 'green' ISA is an example of a range of funds that choose different screening methods.
Dark green funds have the most restrictive list of investment exclusions and are likely to exclude entire sectors, such as oil and gas, or even companies with poor employment practices. Jupiter Ecology is considered to be among the darkest green of investment funds -- and a consistent table-topper when it comes to performance.
Light green funds, like the Standard Life UK Ethical Fund, are less restrictive. These may be willing to invest in oil, pharmaceuticals and banks, but would usually avoid tobacco, arms and pornography. For example, they might invest in a "best of breed" oil company that's greener or more environmentally conscious than others in the sector.
The suspicion remains, however, that ethical investing can involve sacrificing returns for principle. You'll be glad to hear that this is far from true. Of course, as with all funds, the performance of ethical investments has varied greatly, but some, like the Jupiter Ecology Fund, have proved long-term favourites among investors and experts alike.
What is in no doubt is that these funds' popularity will continue to grow. The market has been booming since the UK's first ethically screened fund was launched in 1984 -- Friends Provident's Stewardship Fund -- with over ten new ethical funds launched in the last year alone.
Overall, ethical funds may not suit everyone and it's wise to have a clear idea of your objectives before you start looking for one. Make sure you find a fund that matches your principles, and check the experience of the fund manager and the costs.
Of the four reviewed, Jupiter Ecology is our firm favourite. It's a well-established and truly green environmental fund -- with the promise of good returns over the long-term. Even for the non-greenies, this is a good choice if you want to see the value of your fund soar.
A useful tool is Eiris' website, which offers information about ethical investing and has a directory of the financial advisors who are well-versed on ethical investment. Below, we've rounded up four of the best ethical ISAs on offer today.
F&C Stewardship Income Fund
It's a mainstream ethical fund with consistent returns and 20 years of history, so it deserves a home in every ethical investor's portfolio Read full review...
Jupiter Ecology Fund
A popular fund with the greenest of credentials and a history of good returns Read full review...
Norwich Union 'Green' ISA
There's a good range of ethical investments, but we wish the funds could be accessed without an independent financial advisor Read full review...
Standard Life UK Ethical Fund
It's a solid ethical fund for the green minded to slot their cash away for the long term Read full review...
