Ethical Investing

Invest in your values

Saving for the future is important, and so is staying true to your values.

Wealthify has joined forces with best-in-class ethical fund providers to create a range of five Ethical Plans that let you invest in organisations committed to having a positive impact on society and the environment.

All our fund providers are signatories of the Principles of Responsible Investing (PRI), the world’s leading proponent of responsible investing. They actively-manage their ethical funds, keeping a close eye on the organisations in which they invest, and employing rigorous ongoing screening to ensure that ethical standards are maintained.

So now you can do your bit for the future and give your money a chance to grow.

We invest

Wealthify Ethical Plans aim to exclude industries and activities that are considered harmful to society and the environment, from tobacco and gambling to deforestation and unfair labour practices.

We only invest in organisations committed to making a positive impact through their environmental, social and governance (ESG) practices.

So you can invest in a sustainable way.

Our ethical fund managers regularly monitor the activities of the companies they invest in and can use their shareholder influence to maintain and raise ethical standards.

We optimise

Our investment team use a bespoke optimisation tool and regularly review your Plan to keep performance on track.

Above all, we aim to make sure your investments take advantage of the good times and are sheltered from the bad.

Please bear in mind the value of your investments can go down as well as up and you may get back less than you invested.

Our fund providers

Wealthify Ethical Plans use best-of-breed mutual funds and exchange traded funds (ETFs), giving you a balance of shares, bonds and some thematic investments, such as gender equality or green energy funds.

Learn more about our Ethical Plans

What is ethical investing?

Ethical Investing aims to exclude profiting from activities that are considered harmful to society and the environment and to invest in organisations, companies and projects that are committed to operating in a way that is sustainable for the future.

This is typically done by filtering out harmful activities (negative screening) and proactively seeking to invest in companies that are committed to making a positive impact through their environmental, social and governance (ESG) practices (positive screening).

Negative screening: most ethical funds will screen the so-called ‘sin stocks’ such as tobacco, gambling, weapons and adult entertainment. Other issues screened might include animal testing, intensive farming, nuclear power, genetic engineering, deforestation, and poor human or labour rights. The activities screened and the screening criteria used, vary between fund providers.

Positive screening: aims to identify those companies demonstrating or showing commitment to achieve the highest standards of practise in the areas of environmental impact, social justice and corporate ethics. Only organisations that score highly across these three areas will be eligible to receive investors’ money.

Wealthify’s ethical plans combine negative screening with proactive selection based on ESG scores, as well as qualitative, human consideration of a wide range of other factors that contribute to a commitment to future sustainability.

Ethical investing is one of a number of terms used to identify sustainable approaches to investing. Others include: Environmental, Social and Governance (ESG), Sustainable Investing and Impact Investing.

What type of investments do your ethical plans contain?

Our ethical Plans are built using a combination of mutual funds and ETFs (exchange-traded funds). The funds contain multiple investments, selected by the fund providers according to their strict ethical screening processes.

The funds will typically include:

Shares (owning a piece of a company): excluding companies that profit from ‘sin sectors’ such as gambling, tobacco, adult entertainment and weapons among others. It will only include companies that demonstrate great environmental, social and governance standards, according to the fund providers’ and Wealthify’s strict criteria and ethical investing policies.

Bonds (an IOU from a government or company with some interest): both corporate and government bonds may be included and will be subject to the same strict screening criteria as shares.

Thematic investments: one or two funds will focus on investing themes such as gender equality (companies that strongly champion these issues) or green energy and will mostly be used in higher risk plans.

Which ethical funds are you using?

We have a pool of up to 25 funds with which to build your ethical plan. The combination of funds we use depends on which investment style you choose and how we decide to balance your plan. The pool of funds will also change from time to time.

We’re using active (rather than passive) ethical funds in our plans, so-called because they are ‘actively’ managed to ensure that the investments within maintain the high ethical standards required. We think this is a robust way to manage our ethical investment plans, since actively managed ethical funds can take a far more qualitative approach: using a wider set of criteria and applying a common-sense approach to selecting sustainable investments. Passive funds on the other hand use a fixed ESG score to screen companies, offering little flexibility. Passively-managed ethical funds are also unable to exert shareholder pressure on individual companies in order to drive for positive change.

Current list of funds:

  1. Vanguard US Government Bonds
  2. HSBC UK Gilts
  3. Vanguard Euro Government Bonds hedged
  4. Lion Trust SF Corporate Bond
  5. Kames Ethical Corporate Bond
  6. Royal London SF Managed Income Trust
  7. EdenTree Short Dated Bond
  8. Royal London Ethical Bond
  9. EdenTree Sterling Bond
  10. UBS US Most Liquid Corporates
  11. Royal London SF Sustainable Leaders
  12. LionTrust SF Global Growth
  13. LionTrust SF European Growth
  14. Stewart Investors SF Asia Pacific ex Japan
  15. Stewart Investors SF Emerging Markets
  16. Ishares MSCI Japan SRI
  17. Kames Capital Ethical Equity Fund
  18. L&G UK Ethical Trust
  19. EdenTree International
  20. UBS Gender Equality

Please note: the funds and fund providers we use will be reviewed and may change from time to time, which may not immediately be reflected here.

How do you ensure that the funds remain ethical?

Ethical fund managers will regularly search for new companies to invest in, whilst also monitoring the activities and practises of the companies already in the fund, to ensure expected standards are maintained.

As shareholders, funds can even use their influence and voting power to steer the organisation towards ever higher ethical standards, attending AGMs and lobbying the board of directors. Where the fund holds a significant shareholding (e.g. 10% or more) they may get an audience with the board of directors where they can highlight issues and help influence the strategic direction of the organisation. Ethical fund providers sometimes join forces to wield more influence over the board, if their own shareholding is too small.

If a company consistently allows its standards, and therefore its ESG rating, to slip, fund managers are able to withdraw investors’ money and remove the company from the fund.

All ethical fund providers have built a level of independent verification into their processes, usually carried out by an autonomous and impartial organisation, to ensure that no bias creeps into the fund’s screening and monitoring process.

Wealthify also has its own code of practice, set out in our ethical investing policy. Our investment team will regularly monitor the ethical funds using specialist ESG company assessments conducted by a third party, to ensure that their standards of practice are not falling below what is expected.

What do your ethical funds exclude?

Each fund provider will negatively screen (i.e. exclude) companies involved in certain sectors and activities. Typically, these will be ‘sin sectors’ such as gambling, tobacco, adult entertainment and weapons. The full list of sectors considered can be much wider.

The exclusion criteria also vary between providers: some funds will completely exclude a company profiting from harmful activities (e.g. tobacco) whilst others may invest in the company, provided it earns no more than 10% of its overall profits from the activity in question. This 10% tolerance allows a small degree of flexibility to account for instances where a company isn’t directly involved, but could be exposed to a harmful activity via, for example, a parent company or supplier. Fund managers argue that earnings of less than 10% demonstrates there’s effectively no significant involvement in that activity and an investment in the company is justifiable.

A 10% tolerance is applied to the screening of some activities by the fund providers we use. Therefore, we can never guarantee that our plans will not contain some degree of exposure to any of the harmful activities listed.

Our ethical funds aim to exclude the following, subject to an up to 10% tolerance:

Weapons; gambling; animal testing; deforestation; nuclear power; climate change; oppressive regimes; adult entertainment; tobacco; excessive political donations; human rights issues; intensive farming; unfair labour practises; genetic engineering.

Will performance be lower with an ethical portfolio?

Returns are not guaranteed with any form of investing and you could get back less than you put in.

With all types of investing, cost affects your performance, as the more you pay in fees and charges, the fewer returns you get to keep. The overall cost of investing in an ethical plan is higher than that of a standard plan and therefore, investing in an ethical plan may affect performance and your returns could be lower than a standard investment plan with an equivalent investment style. Ethical funds aim to avoid investing in certain sectors, like tobacco or gambling, which could also affect your plan performance.

You can get some idea of how ethical investments perform against their standard counterparts by comparing market indices like the FTSE for Good against the FTSE All Share. Of course, past performance is not a reliable indicator of future performance.

Why are your ethical plans more expensive?

We use a blend of active and passive ethical funds in our plans which are a little more expensive (average 0.54% per year) than the funds we use in standard Plans (average 0.21% per year). The extra cost reflects the fact that active funds are proactively and comprehensively managed to ensure the investments retain appropriate ethical standards. We think this is a robust way to manage our ethical investment plans, as it allows for a qualitative and common-sense approach to selecting and monitoring sustainable investments.

However, our annual management fee for ethical plans is the same as standard plans and transaction costs (also known as ‘spread costs’) will typically be lower, at an average 0.03% per year.

Wealthify Customer Reviews

4.37 Average

326 Reviews

James

The app and investment options seem good and all, but my reason for leaving a review was the amazing customer support I received. I spoke to Rhiannon Maggs and she was wonderful. The perfect person to talk to. She was kind, professional, helpful, and she replied instantly. I'm leaving this hoping that possibly someone in a managerial position may see this and be able to give her what she deserves. Honestly from my experience she is the perfect employee and should be rewarded. Thank you Wealthify, and thank you Rhiannon!

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Albert Millis

My experience with Wealthify has been fantastic so far. The website is easy to use and the customer service are very responsive. Additionally, I had some issues with the app not working, so I emailed the team and they got back to me really promptly, not only fixing my issue by addressing the app issues and getting them fixed too!

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Anon

Great service. Quick responses from customer. Steady performance from the investment team.

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Matthew Tanner

Easy to setup and use, simple charging structure, well balanced investment portfolios, easy withdrawal and lovely people.

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Harry Gill

I had an unfortunate matter when, my request for a withdrawal was made a little late. This would have resulted in me missing my property completion date! (and therfore a big penalty). Fortunately, Nick and the team were very helpful and pushed through my funds in time for completion :) Very helpful and skilllful team at Wealthify. Thank you again.

Posted 4 months ago

Anonymous

good app, website and customer support

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