Ethical investing is becoming more popular, even though some critics dismiss the idea as naive. They argue that selecting investments on ethical grounds usually means sacrificing higher returns for a clear conscience. But there are a few promising options in the sector and Kames Ethical Equity Fund might be one of them, writes Ed Monk in the Daily Telegraph.
“The fund, which has been running since 1989, has achieved almost twice the return of the FTSE All Share index over five years… despite avoiding companies that pollute the environment, service the armed forces, make large political donations or fall foul of other ethical criteria.”
Fund manager Audrey Ryan, who has headed up Kames Ethical since 1999, admits that it can be “a little frustrating” having to avoid large, defensive sectors. But she tells Monk that these limitations are positive as they “force you to think laterally, and look for stocks that can offer investors something similar”.
The portfolio is almost exclusively invested in UK-listed equities, with the financials and consumer-services sectors making up the largest exposure at around 30% each. Smaller holdings include digital growth companies, such as real-estate listings website agency Rightmove and online takeaway-ordering company Just Eat. Perhaps surprisingly, the fund has a small exposure to fossil fuels through
BG Group, but its criteria mean that it has to steer clear of BP and Shell. The fund has beaten its benchmark by 24% over three years and 11% over one year. The annual ongoing charge last year was 0.8% for the “B” share class, available through major fund supermarkets.
Contact: 0800-454422
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| Kames Ethical Equity Fund’s top ten holdings | |
|---|---|
| Holding | % of assets |
| Relx | 3.65% |
| Vodafone | 3.20% |
| Legal & General | 3.12% |
| Lloyds Banking Group | 3.04% |
| BG Group | 2.78% |
| Prudential | 2.61% |
| Severn Trent | 2.61% |
| ITV | 2.60% |
| CRH | 2.28% |
| Aviva | 2.24% |