For a long time investors were keen just to make money, without much thought to the effects the companies they were invested in were having on the world. Each year it seems that people are trying to live a little better and slightly improve the world. In recent times consumers are making a conscious choice to choose products from businesses that are trying to do the right thing. We are also seeing a growing interest in investing ethically. Everyone has different ethics so it would be impossible to design a portfolio to everyone’s liking, you would need to create your…
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For a long time investors were keen just to make money, without much thought to the effects the companies they were invested in were having on the world.
Each year it seems that people are trying to live a little better and slightly improve the world. In recent times consumers are making a conscious choice to choose products from businesses that are trying to do the right thing. We are also seeing a growing interest in investing ethically.
Everyone has different ethics so it would be impossible to design a portfolio to everyone’s liking, you would need to create your own portfolio for that. There are some institutions that have created their own ethical portfolios that investors can invest in. Here are three options:
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This is an ETF offered by BetaShares to provide investors exposure to ‘100 large global stocks (excluding Australia) which are climate change leaders and which are not materially engaged in activities deemed inconsistent with responsible investment considerations’.
BetaShares is serious about only including ethical companies, which is why it recently announced it will remove Facebook from the portfolio.
Its top holdings include Intel, Visa, Apple, Home Depot, Roche Holdings and MasterCard.
UBS IQ MSCI Australia Ethical ETF (ASX: UBA)
This is an ETF offered by UBS to provide investors a ‘diversified exposure to the Australian equity market and aims to replicate the performance of the MSCI Australia ex Tobacco ex Controversial Weapons Index, before fees and expenses’.
It has around 70 holdings, but it’s actually fairly similar to Australia’s main share market indexes. Its top holdings include Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), BHP Billiton Limited (ASX: BHP), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).
Australian Ethical Investment Limited (ASX: AEF)
Australian Ethical is a fund manager that aims to invest in companies to have a positive impact on the planet, people and animals. It offers managed funds and superannuation for investors to change how they invest. You could choose to invest in the manager or the funds it operates.
It is much more stringent about the shares it invests in. It doesn’t in coal, oil, gambling, harmful products and other categories.
It has various funds for investors who wish to invest in different areas. Its top international share holdings are Microsoft, Alphabet (Google) and Prudential. Its biggest Australian holdings include NAB, Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Limited (ASX: BOQ).
Out of the three above ethical options I’ve mentioned I would go for Australian Ethical or the BetaShares option. I like the BetaShare offering because it gives global exposure. The Australian Ethical options seem to be the ‘most’ ethical. The fund manager could win a big super mandate, which would increase its funds under management (FUM) significantly.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.