Socially responsible investing (SRI) is a growing approach to investing with an eye toward environmental, social and governance principles. It includes a concern with both what a company does and how it does it both internally and externally. At this point, the movement has grown to the point that so-called robo-advisors are getting in on the act. Nutmeg is one of the latest to launch an SRI portfolio range.
The intersection of robo-advice and SRI
The advent of socially responsible investing has had a positive and growing response with young people just a bit more interested than the older crowd. Earlier this year, a survey found that while only 23 percent of those over 55 were interested in SRI, over 55 percent of those under 45 were interested. The survey was conducted by Boring Money whose managing director, Holly Mackay, stated:
“When we ask consumers about ethical investing we definitely note growing interest. We anticipate this will become a mainstream product offering over the course of the next 12 months. A key challenge for providers will be communicating all the nuances of the various flavours of ethical-type portfolios to people in a clear, accessible way.”
Over the course of 2018, SRI has been intersecting with another movement, that of using robo-advisors to manage portfolios and reduce management costs. Robo-advisors automate much of the process of choosing which stocks are included in a portfolio based on guidelines created by humans. At this point, they have enough history that one can examine the difference between the money saved by reduced expenses and that made by competing approaches and funds for oneself.
Nutmeg joins the movement
Examples of robo-advice firms launching SRI portfolios this year include Wealthify, Moola, PensionBee and Wealthsimple. This month, another robo-advice firm, Nutmeg, launched a group of portfolios dedicated to SRI with 10 differing risk levels. The portfolios will be focused on exchange-traded funds easing the pressure on the robo side of the equation.
Nutmeg’s portfolio range includes a scorecard ranking each portfolio in relation to environmental, social and governance (ESG) principles which define key concerns for SRI. In addition, Nutmeg itself has signed on to the UN-supported Principles of Responsible Investment. Portfolios will identify acceptable investments in part by excluding companies focused on tobacco sales, nuclear production and problematic weaponry.
Portfolios have quite a low management fee, the same as other Nutmeg portfolios, at 0.75 percent on the initial 100,000 invested pounds and 0.35 percent on all additional amounts invested.
Nutmeg’s chief investment officer, Shaun Port, stated:
“There’s very little information for people who want to know if their investments are in line with their values; be they carbon emissions, gender equality on boards or a business’ management of their data…no investment portfolio can be designed to dodge every controversy, but we’re committed to improving choice in the investment world, being transparent about how sustainable our portfolios are and empowering investors to decide what’s right for them.”
As more investors turn to SRI options beyond individual stocks, they will send a strong signal that ESG principles matter. This, in turn, may well cause some companies to shift focus in order to increase investment. Over the long haul, significant change may result from investors’ decisions as well as those of consumers.
How to invest in learning for your employees
One way that you can indirectly invest in your business is by beefing up employee learning. Here are four ways...
Automation is happening—at a glacial pace
Everyone is talking about automation taking over jobs, but only a few people are talking about the fact that it's...
Renewable energy: A multi-trillion-dollar marketplace is emerging
The U.S. energy grid is ageing and it’s the perfect opportunity for energy contractors to up their game and help...
The current state of crypto gambling
Crypto gambling is rising in popularity but there are many things you need to know before you decide to dip...
This Wall Street outcast is giving everyone access to insider deals
Pre-IPO opportunities are no longer reserved for just the wealthiest one percent—thanks to a new equity investment platform.
- Featured5 days ago
How the credit market is evolving with technology
- Featured4 days ago
Public restaurant companies: A review of Yum! Brands (YUM), Brinker International (EAT), West Coast Ventures Group (WCVC)
- Business5 days ago
How to avoid forgetting something during a trip
- Entrepreneurship5 days ago
4 questions to ask before investing in a mobile app