Staci West is new to investing, although she has put cash aside for a number of years into savings accounts. She says: “Over the past couple of years my husband and I have been saving into a cash ISA, first to help pay for our wedding and then to finance his masters degree in cognitive behavioural therapy for children and young people.”
But now those financial goals have been met, West and her husband are looking to raise a deposit for a house, as well as planning for retirement. As a result, they have started to look more seriously at their investment options.
West, who lives in Wimbledon with her husband, Richard, says the couple have focused on more ethically-focused or sustainable funds.
“I like to think that my money is being invested in companies that are doing good – coming up with new products or services that can help society,” she said. “I don’t want to support companies that are contributing to climate changes.”
West says the couple have started putting a regular monthly amount into an ISA. “When it comes to pensions, we’re lucky as my husband is a primary school teacher, so he has – or will have – a decent pension. It’s just mine we need to concentrate on.”
Top Rated Sustainable Funds
The money going into their ISA is currently split between two funds: Standard Life Investments UK Ethical and Rathbone Ethical Bond.
West says: “This gives us both equity and bond exposure. We are hoping we may be able to use the money from this ISA to cover a deposit on our first home, so we don’t want to take too much risk with this money, but we want to get a better return than cash savings.”
The Standard Life Investment UK Ethical fund has a Bronze Rating from Morningstar analysts.
Samuel Meakin, an analyst at Morningstar says: “An experienced manager and a well-established team process make this a solid choice for investors seeking exposure to a UK equity portfolio with an ethical screen.”
The manager of the fund Lesley Duncan has been at the helm since 2004. Over this period the fund has outperformed the FTSE All-Share Index. Meakin adds: “The manager has built a solid performance track record, albeit with above-average volatility. “
Rathbone Ethical Bond has a five-star rating performance rating, delivering annualised returns of 5.7% for the past five years.
West invests both her ISA and pension through Chelsea Financial Services, and says the information they provided helped her select these fund choices.
A Bolder Approach to Investing for Retirement
When it comes to West’s pension she is taking a little more risk with her investment choice. West, who is 25, says she can afford to take a longer-term view.
She says: “At the moment I am investing £250 a month in Stewart Investors Asia Pacific Leaders. It is not an out-and-out ethical fund, but sustainable investing is at the core of its investment process.”
This fund has a Silver Analyst Rating from Morningstar, and a four star performance rating.
Morningstar analyst Simon Dorricott says: “Despite relatively recent changes to the lead manager and approach, this fund remains a strong offering.”
He points out that in July 2015 First State Stewart split into two totally separate entities: First State Stewart Asia and Stewart Investors. “As a result of the split, support for this fund changed, but our view has been that the resources across Stewart Investors are sufficient to cover its high-quality universe of stocks.”
Subsequently a new manager David Gait took over from veteran manager Angus Tulloch. Dorricott says that Gait has considerable experience of investing in Asian emerging markets, and has adopted a sustainable approach to the portfolio.
West adds: “Once we have built up our savings I’ll consider investing in some more funds, but I think three is enough to start with.”
She says this more ethical approach has been shaped by both her, and her husband’s jobs. At the moment West is working in an administration role for a financial services company. She says this has given her a bit more insight into how she can invest more ethically.
Her ethical outlook extends to her personal life too. West adds: “We have a dog called Kendall who is an emotional support animal. She has been trained to help adults with anxiety and depressions. Richard takes her into school once a term to help some of the children there.
“My ultimate goal is to train dogs to be used in animal-assisted therapy, particularly for children with autism. It can be a really expensive and time-consuming undertaking, but it is something I truly believe in and I think can help a lot of people.”
We are looking to talk to investors about how they what is in their portfolios, and what their best and worst investments have been.
If you are interested please contact us on: ukeditorial@morningstar.com or tweet us at @UK_morningstar
