As described in a guest post for Muckle , young investor Charlotte Merriman (Ethical Investing: Millennials doing good doing well) identified that there has recently been a marked increase in the number of investment managers offering ethical investment portfolios, and they have recently been joined by digital investment manager, Wealthify.
As Charlotte eloquently described, young investors already face plenty of challenges on their journey to financial independence (FIRE – Financially Independent, Retired Early), but many are determined to adhere to their principles when it comes to their investments, actively seeking ethical investment opportunities, or possibly going to the next level to find companies that set out to make a positive difference – impact investing.
Wealthify was one of the early entrants to the space, backing up its stated ambition to democratise investment and ‘turn one million savers into investors’, by allowing customers to invest with as little as £1; this entry level is maintained for those choosing ethical investments .
The darling of the Welsh fintech scene joins the growing ranks of so-called robo advisors offering such an option including Moola, PensionBee and Wealthsimple.
Wealthify currently offers five portfolios of ETFs based upon the level of investment risk associated with each – cautious, tentative, confident, ambitious and adventurous – and the ethical portfolios reflecting its current proposition.
In order to confirm its ethical credentials, the underlying investments are screened to ensure that there is no exposure to things such as weapons, gambling and tobacco; conversely, companies that demonstrate ‘excellent environmental, social and governance practices’ are positively vetted.
The new portfolios will cost from 1.12% a year including fund charges compared to 1% for their standard portfolios because of the inclusion of more expensive, actively managed, funds.
the absence of a ‘fair trade’ investment option could be an impediment to engaging new investors determined to do the right thing
In announcing its latest development, Michelle Pearce, CIO and co-founder of Wealthify, said: ‘We have listened to our customers and I’m delighted Wealthify is now able to offer ethical portfolios, starting from just £1. We want to democratise investing and give our customers the opportunity to invest in line with their principles.’
Holly Mackay, MD of independent analyst and financial comparison site Boring Money recently said: ‘When we ask consumers about ethical investing we definitely note growing interest.’
In recent research, Boring Money found that 74% of investors were interested or potentially interested in ethical and socially responsible investing; younger investors reported more interest with over 55% of under 45s saying they were interested compared to 23% of over 55s.
‘We anticipate this will become a mainstream product offering over the course of the next 12 months. A key challenge for providers will be communicating all the nuances of the various flavours of ethical-type portfolios to people in a clear, accessible way.’ Said Mackay
With robo advisors determined to reach out to young investors it could well be that in the not-too-distant the absence of a ‘fair trade’ investment option could be an impediment to engaging new investors determined to do the right thing.