My ethics are my own

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I appear to be under fire on twitter for claiming I am investing ethically by purchasing units in the LGIM FutureWorld fund.

I am aware that this fund is not strictly an ethical fund and that my investment isn’t an “ethical investment” according to the definitions dished out by the FCA and reinforced by trade bodies such as the Investment Association and the PLSA.

But as the LGIM Future World fund meets my criteria for ethical investment and my ethics are my own , I will stay with it.  I don’t think “ethical” should go the way of “advice” and become the property of  regulated experts.

I suspect that the controversy over this fund begins because Pension Bee, that offer FutureWorld on their fund platform, have written to LGIM , asking for an explanation as to why the fund invests in Shell.

Shell have responded to the open letter from Pension Bee with their open letter back. I like the transparency ,


Can we invest money ourselves to meet our ethics?

For most of us , this is unlikely. It is possible to purchase a licence to Morningstar’s Sustainalytics. 

It is possible to subscribe to various feeds such as Sarah Wilson’s Minerva,  Julia Dreblow’s  SRI services   orAlan McDougall and Tom Powdrill’s PIRC

With all this research to hand , you could build your own portfolio of stocks and/or funds and claim to be executing your ideas self-suffeciently.

However most of us will need to take advice from an expert if we are to really crack this. It would appear that IFAs like David Penny and Al Cunningham are now expert enough on what is ethical investment, to put themselves forward for this on twitter and I thoroughly recommend them

They do not have any divine rights on “good and evil” so you will have to work out with them how far you want ethics to guide you in your stock or fund selection and to what extent you are going to “outsource execution” to these fine fellows.

For those who want their investments fine-tuned, there is nothing better than an high class IFA like Al or David Penny.


But for the ordinary investor like me….

I have gone another route , a collective route. I have looked at a few funds which claim to do what I want to them and I have selected FutureWorld because I get it at a very good rate, it is convenient for me to use and because the fund managers are round the corner from where I work and I can have a coffee with them from time to time.


Do people know what they want?

When I became an IFA back in the early 1980s , I found that it was easy to sell the Friends Provident Stewardship Fund because the people I talked with were often Methodist Ministers. They were attracted to this fund for obvious reasons.

35 years later, people are still choosing funds out of conviction. I was pleased to see the results of Pension Bee’s research of 2000 of their policyholders. A sample of the findings were posted on Twitter

 

 

What these tweets tell me is that many people have strong ethical convictions that drive what they want from their investments.

If Pension Bee are to be believed, their conviction is not being matched by the courage of fund managers which appears to be lacking.

I hope that Pension Bee will find a way to offer funds to their investors that meet their investors expectations so that they do not have to consult with experts.

Because the vast majority of people who invest with Pensions Bee or (like me) in Legal and General Workplace Pensions, rely on Pension Bee and L&G to present them with funds that do what they want.


This is why we have fund governance

While I have found LGIM excellent at providing the fund choices I want, I have (of late) found L&G’s platform governance deficient and I’ve said so both to its executive and to its IGC.

Pension Bee appear to be doing what L&G and their IGC is not doing , which is talking to its savers about what they want.

I may find out in the past few months this has changed, and I look forward to reading the IGC’s Chair’s Statement in April to prove me wrong. But right now I think I prefer Pension Bee’s approach to fund governance and if they offer me better fund governance than L&G, I may move to Pension Bee for LGIM fund management in future.

My ethics are my own, and so is my money!

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in advice gap, age wage, pensions and tagged , , , , . Bookmark the permalink.

3 Responses to My ethics are my own

  1. Brian G says:

    Yes. I often disagree with your views but it is clearly up to you and a matter of personal choice how you invest your money. It is not fair to criticise you for that, especially when there are so many other things to criticise you for 😉

  2. Eugen N says:

    Shell would be problematic to justify as ethical investment. I tend to shy away from the word ethical to sustainable. (By the way there is nothing sustainable in what Shell does!)

    More to that we offer now a new service named decarbonisation, where the main ethos is to not invest in firms which dig (or suck) out of the ground carbon, not to invest in banks (which finance them) and energy companies who burns the stuff.

  3. henry tapper says:

    Thanks for the critique Brian – ethics. like opinion and advice are hight on the risk spectrum; should we keep them to ourselves or should we have the courage of our convictions!

    Eugen, I guess we should be boycotting ourselves , but most of us are now conscious that we turn on the ignition switch, we are implicitly endorsing fossil fuels.

    It’s clearly hard for us to make a difference, when I asked my son why he was eating no meat, he said it lowered his carbon footprint (his new year’s resolution).

    Everyone can have had an ethical code, in the end if will make you happier than having an unethical code. Behaving morally , in the end makes more sense than behaving amorally or imorally.

    we will get there – but we’ll all need our Gretas

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