Lynne King, a retired teacher, has tried to ensure her investments have a more ethical stance in recent years. She and her husband invest in ISAs with a view to supplementing their income later in life.
At the moment King, who is 66, gets both her teachers’ pension and the State Pension, so is not taking any additional income from her ISA. “Currently the income they produce is reinvested for our future. But at some point we probably will start to take an income from these funds.”
More recently the couple invested in EdenTree Amity Sterling Bond fund. EdenTree Investment Management was previously known as Ecclesiastical, but rebranded its investment management arm in 2015. Although the name is only a year old, this fund management group has a 30-year track record when it comes to responsible investment strategies, and it launched one of the first ethical investment funds in the UK.
King says: “I liked the fact that this fund doesn’t invest in weapon manufacturers. I don’t want to be a shareholder of companies engaged in such activities. I’d prefer it if the money we have invested is doing some good.”
Armament companies are not the only sinful sector EdenTree avoids. Its funds do not invest in companies that have a material involvement in alcohol and tobacco, gambling or the publication of violent or explicit materials.
As a bond fund, this investment aims to provide an attractive level of income. To do this it invests in a diversified portfolio of Government and corporate bonds, which are issued by companies which EdenTree deems make a positive contribution to society and the environment through sustainable and socially-responsible practices.
King says she also likes the fact that the group is essentially a charity. EdenTree is part of the Ecclesiastical Group, which in turn is wholly owned by the Allchurches Trust Limited, a registered UK charity. She says: “I like the fact that there aren’t shareholders taking their cut. Instead they give surplus profits to good causes.”
“This is Investment, Not Charity”
However, King says she is not “totally altruistic”, adding: “I want to ensure that I’m also getting a decent return on my money. This is an investment, not a donation to charity.”
The couple also have some money in Kames Ethical Cautious Managed, another ethical fund with a strong track record managed by Audrey Ryan and Iain Buckle. This has a four-star performance rating from Morningstar, and a Bronze Analyst Rating.
This fund has a higher equity component, but also invests in bonds, cash and other fixed-interest securities.
Morningstar says: “Kames Ethical Cautious Managed is a strong choice for ethically conscious investors. It applies relatively high standards of ethical screening, yet performance has been strong and consistent relative to peers in the IA Mixed Investment 20-60% Shares group.”
The fund's rolling three-year returns have been consistently above that of the IA peer group and mostly in the top quartile. Morningstar analysts add that the fund's charges are also competitive “adding to the attractions of this proposition.”
Seeking Financial Advice in Retirement
King says not all of the couple’s investment have such a strict ethical criteria. “We invest in a broad portfolio of funds. We use a stockbroker and he has advised us as we’ve moved into retirement.”
She adds: “I’m a fairly independent and strong-minded woman, but I have to admit that when it comes to pensions and investments I do leave some of the leg-work to my husband. I find it time-consuming and a bit boring. But I have been more interested in these ethical investments.”
The couple, who have two grown-up sons, and one granddaughter, have also invested in property.
King explains: “We bought a holiday home in the North of England with the small inheritance I received. We use this ourselves but can also let it out for additional income.”
She says this has proved to be a “fantastic investment” and have given them a good return on their money. “Who knows, with the pound falling perhaps we will get more interest from abroad.”
