Thursday 11 November 2010

Ethical Investing: Myth 4

Myth 4: It's all or nothing.




Fact: Many modern green and ethical investors choose to"dip a toe in the water" by mixing some green and ethical options with their other investments.


From my perspective, frankly for most investors it simply is not possible to achieve a diversified portfolio (spreading risk) across different asset classes (types of investment) and global markets. In practice the bulk of retail ethical funds are within the UK Equity and Global Specialist sectors. As a result these is not really a "single solution" for a proper portfolio so some compromise ought to be made. Many experts argue that asset allocation adds far more to a portfolio than the selection of the funds - so it does seem somewhat naive to be an "all or nothing" investor when it comes to selecting ethical funds. In the same way that purely selecting UK equities (representing only about 10% of global markets) would seem irrational too.

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