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How women invest with impact

Good Money Week have found that women are championing positive impact investing. We look into why it’s not only a sustainable, but rational approach.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Good Money Week has just finished. It’s a week focused on spreading the word that you can align your investments with your principles.

This year there was a focus on women. Why? Because women, according to Good Money Week research, are the champions of positive impact investing, and are more inclined to want their investments to deliver both a positive return and impact on the world. Here’s why we think it can be a smart way to invest.

Recognising the long-term potential

Retail investors – that’s you and me, not big institutional investors like banks – are investing more money into ethical funds. We recognise the opportunity investing in socially responsible companies, and the value they can deliver in the long run.

And we’re not alone. Not only has the amount we’ve invested into ethical investments trebled since 2008, we’re seeing more traditional fund managers put more emphasis on socially responsible investing too.

This makes sense. Investing is all about growing your wealth. Ethical investments will try to achieve this by focussing on socially responsible and forward thinking companies – ones that will hopefully be around for decades, if not longer. Please remember that any investment could rise or fall in value, so you have to be prepared to get back less than you put in.

See our latest ethical and sustainable investment ideas

Principles can be profitable

Audrey Ryan is one of the leading UK ethical investors. She’s managed Kames Ethical Equity since 1999, and has achieved growth of 282.2%* compared to 196.3% for the broader UK stock market. Past performance is not a guide to the future.

We spoke to Audrey about her approach to investing with impact and the ethical performance myth. A belief that you have to forgo either performance or principle. Quite the opposite.

Audrey talks about her strict approach to ethical fund management, and how restriction helps her focus on generating superior returns.

Heather: I'm here with Audrey Ryan to talk about her Kames Ethical Equity Fund. Hi Audrey

Audrey: Hi there

Heather: So what is ethical, how do you define it, and what does it mean to you?

Audrey: We've been offering an ethical equity fund to our clients for almost thirty years we launched the fund in 1989 and it was one of the first funds that were launched within the marketplace providing an ethical opportunity for the investor. The ethical fund that we have is particularly suited to someone who has fairly strong views with regards to their ethical principles or indeed their ethical morals and what we're doing with our UK vehicle ethical vehicle is screening companies based on the products the activities or services that they undertake which could be either harmful to society or indeed harmful to the environment so it's one of the strictest funds in the marketplace but very much still in demand from the ethical investor.

Heather: So what sort of things you screen out?

Audrey: So we have twelve ethical principles propriety to us that we look for in the companies that we invest in it is negatively screened and you will for example there will be the traditional addictions where we all screen out tobacco and alcohol we also will not invest and companies who are involved in the arms or the military and the fund that we have is particularly strong from an animal welfare point of view so you know do not invest in businesses that are involved in any form of animal testing

Heather: So a lot of the companies that you mention are some of the UK's largest companies does that mean you don't have very many large companies in the fund Audrey: Yeah looking back the history of the fund typically we do have a more of an exposure within the fund towards UK small and mid-cap stocks the majority of the top 20 companies in the UK equity market do not pass our screens through whether they are the large oil and gas companies or the large mining companies or indeed many of the traditional staple related sectors such as food retail aerospace and beverages so as you rightly say the fund is much more skewed towards FTSE 250 and FTSE small cap rather than the large-cap names within the marketplace

Heather: So you have your screen it's screened out all of the companies that you feel aren't ethical enough to be invested in what how many companies are you left with then to choose from?

Audrey: With regards to the FTSE All Share I can invest in approximately 300 companies for the ethical equity fund and that number has been fairly stable over the last few years and you know I can still invest in a variety of sectors and indeed a variety of the indices and in terms of you know generating ideas for the portfolio itself once it's passed the ethical screen I as a fund manager I very much leverage the strong investment ideas coming from within our UK equity team. We have nine individuals researching the UK small mid and large cap marketplace and so the ideas that I populate the fund with from a bottom-up perspective is very much driven by a team based UK research team

Heather: And there's often an argument that you can either invest ethically or you can invest in a fund that's going to perform strongly what would you say to that?

Audrey: The ethical equity fund that we manage is almost 30 years old we launched it in 1989 and certainly our performance data would absolutely dispel any myth that investing ethically brings with it a long-term performance penalty for the client. Looking at the returns that we've delivered in the fund since launch we've actually outperformed the investment association median fund over that time frame so we would argue that investing ethically does not bring with it a long-term performance penalty.

Heather: Thank you

Audrey: Thank you

All investments fall as rise in value, so you could get back less than you invest. Past performance is not a guide to the future. This video and our research are not advice. If you are unsure of the suitability of an investment for your circumstances, please seek advice.

Find out more about Kames Ethical Equity

Since taking over the fund, Audrey Ryan has outperformed both the FTSE All-Share and the IA UK All Companies sector, an average of her non-ethical peers managing funds in the UK.

Kames Ethical Equity - performance under Audrey Ryan

Past performance is not a guide to the future. *Source: Lipper IM to 30/09/2018.

Annual percentage growth
Sept 2013 -
Sept 2014
Sept 2014 -
Sept 2015
Sept 2015 -
Sept 2016
Sept 2016 -
Sept 2017
Sept 2017 -
Sept 2018
FTSE All Share 6.1% -2.3% 16.8% 11.9% 5.9%
IA UK All Companies 6.2% 2.0% 12.1% 13.8% 5.6%
Kames Ethical Equity 6.8% 9.8% 5.8% 9.0% 2.8%

Past performance is not a guide to the future. Source: Lipper IM to 30/09/2018.

Find out more about Kames Ethical Equity

Kames Ethical Equity Key Investor Information

See a full list of what type of companies are excluded from the fund

What are your options?

When looking at ethical investments you’ll need to make sure they fit your financial goals as well as your moral compass.

In our latest research we share some of our favourite funds that take on a sustainable or ethical approach, as well as three companies from the FTSE4Good index, a list of companies deemed ethical by the FTSE group. If you’re not sure if an investment is right for you please ask us for advice.

Fund ideas

Share ideas

If it all seems a bit much and you just want to find out a bit more, take a look at our guide. It breaks down what types of investing are out there and can help you find what works for you. This guide like our research and fund ideas are not personal advice.

Guide to responsible investing

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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