News | Features
29 Mar 2024 3:57
NZCity News
NZCity CalculatorReturn to NZCity

  • Start Page
  • Personalise
  • Sport
  • Weather
  • Finance
  • Shopping
  • Jobs
  • Horoscopes
  • Lotto Results
  • Photo Gallery
  • Site Gallery
  • TVNow
  • Dating
  • SearchNZ
  • NZSearch
  • Crime.co.nz
  • RugbyLeague
  • Make Home
  • About NZCity
  • Contact NZCity
  • Your Privacy
  • Advertising
  • Login
  • Join for Free

  •   Home > News > Business > Features

    Ethical Investing Likely To Catch On Here

    Ethical investing - which has been increasingly popular in other western countries - is likely to catch on in New Zealand now that KiwiSaver providers have to state in their investment documents whether they offer this option.


    While many providers are simply saying that they don't have any ethical funds, a growing number are either offering them or are considering doing so.

    With KiwiSaver attracting a new type of person into managed funds - perhaps a less business-oriented and more socially oriented person - many people will at least consider ethical funds.

    There are several approaches to ethical investing - sometimes called socially responsible investing, or SRI:

    · Negative screening. Managers avoid investing in companies in particular
    industries, which might include tobacco, alcohol, armaments, uranium mining, pornography and gambling. They might also exclude companies involved in certain activities, such as animal testing or environmental degradation, or companies that pay 'excessive' salaries to the bosses.

    · Positive screening. Managers invest only in companies that have what the
    manager judges to be good records in environmental issues, climate change, human rights, employee conditions, philanthropy and so on. They may also seek out companies with "good" accounting, marketing or corporate governance policies.

    Sometimes managers use a combination, firstly using negative screening and then selecting from the remaining companies on the basis of positive screening.

    · Engagement. Managers commit to talking with the companies in which they
    have invested and encouraging them to use ethical practices.

    · Best of class. Managers buy what is judged the best company in each
    sector. The fund might include a tobacco or alcohol company, but it would be the best tobacco or alcohol company.

    · A specific cause. Ethical investing is said to have started with funds
    that avoided investing in South African companies in the apartheid era, or in companies that provided supplies for the Vietnam War. These days you might find a fund that, for example, invests only in companies that have a good record on global warming issues.

    Ethical funds invest in a variety of types of assets. While some hold only shares, others include bonds and other financial instruments. Before you decide to invest in an ethical fund, I suggest you work out how much risk you want to take.

    If you prefer a higher-risk fund - which typically holds all or mostly shares and perhaps some property - go for an ethical share and/or property fund. But if you prefer a balanced fund - which typically also holds bonds and perhaps cash - look for an ethical fund with an appropriate mix. You don't want to end up in an all-share fund that is too risky for you just because it is ethical.

    Consider, too, the geographical mix. If you prefer a fund that holds investments from around the world - to take advantage of the risk reduction that comes from diversification - look for an ethical fund with overseas assets.

    From a financial perspective, are ethical funds a good investment? Some research says yes; some no. My conclusion is that, as long as an ethical or SRI fund is widely diversified, it will probably perform about as well over the long term as other widely diversified funds.

    Note, though, that researching and monitoring companies increases the costs of running a fund and is likely to therefore increase fees. So performance after fees may tend to be a bit lower.

    Still, those who invest in the fund might well be happy to settle for a bit less money and a clearer conscience.

    © 2024 Mary Holm, NZCity

     Other Features News
     10 Sep: Spring clean your finances
     13 Aug: Plan ahead to give yourself a debt-free Christmas!
     10 Jul: Wise up to clear credit card debt
     07 May: Ways to prepare for the unexpected
     30 Mar: Time for a financial progress check
     10 Feb: Studying up on NZ Super
     10 Jan: Managing the back-to-school bills
     Top Stories

    RUGBY RUGBY
    The Crusaders' struggles to start Super Rugby have drawn concern from Chiefs coach Clayton McMillan More...


    BUSINESS BUSINESS
    The Government's made a new pay offer to Police More...



     Today's News

    Business:
    The Government's made a new pay offer to Police 21:57

    Entertainment:
    Lily Allen was introduced to Mila Kunis and Ashton Kutcher as Rita Ora - and was too mortified to disclose who she really was 21:53

    Entertainment:
    Mel B's fiance visited her father's grave to "ask permission" to propose to her 21:23

    Accident and Emergency:
    State Highway 6 is blocked by a serious crash, South of Lake Paringa in the South Island's Tasman region 21:17

    Accident and Emergency:
    State Highway One is has now reopened between Kaikoura and Riverlands - after a two-vehicle collision at Kekerengu, north of Kaikoura, this morning 21:17

    International:
    Shopper swallowed as shopping mall floor collapses in eastern China 21:07

    Entertainment:
    Kris Jenner won't spend quality one-on-one time with her grandchildren because it would cost her too much time and money 20:53

    Law and Order:
    A person has died following an incident at a restaurant in Auckland's Browns Bay 20:27

    Entertainment:
    Halle Berry's perimenopause symptoms were mistaken for herpes 20:23

    Entertainment:
    Keke Palmer wants 10 kids 19:53


     News Search






    Power Search


    © 2024 New Zealand City Ltd