Where should investors draw the line between making money and being party to misery and generally immoral behaviour?
It is a question that never seems to bother some people yet many of us do wrestle with it.
Veteran investment writer Ian Cowie is on record as saying he will not touch Invesco Perpetual Income because of its investments in tobacco companies.
I admire his stand. Cigarette companies knowingly market their poisonous products to children through product placement.
But is cigarette manufacturing any sleazier than producing landmines that blow the limbs off children?
Once you scratch the surface, investing can be a murky business.
During the past few weeks I have been watching adviser comments on the Crimea crisis. We have had silence, reassurance and suggestions of buying opportunities.
But no one seemed to feel that perhaps some investors might no longer wish to invest in the morally bankrupt Russian regime.
Even if you overlook the takeover of part of a sovereign nation, there is the question of the inherent economic stability of a country being threatened with sanctions and reprisals.
Weighed against this, of course, there has been the fact the one of the most prominent Russian funds has long been a platform and IFA favourite – and we would not want to offend anyone would we?
No one seemed to feel that perhaps some investors might no longer wish to invest in the morally bankrupt Russian regime.That is why the statement by BlackRock founder Larry Fink, in which he said he would not put money into Russia unless the country followed international law, has been so refreshing – and so in contrast with the lack of moral fibre displayed by many IFAs.
“I would not invest in Russia at this time, not until it wants to be part of the global community,” he said.
My feelings towards BlackRock warmed considerably after Mr Fink’s statement.
Fans of Neptune Russia and Greater Russia may well take the opposite view.
After all, if President Putin continues his current course, the “Greater Russia” remit may soon encompass a far wider range of territories.
Raiding higher-rate tax relief
We really should not be too surprised that Labour is targeting higher-rate tax relief on pensions.
It is easy to argue that there are flaws in a system that gives greater incentives to higher earners than to basic-rate taxpayers.
But what is proposed is not a redistribution of existing tax relief. It is a straightforward raid similar to the one in 1997, which will further undermine the imperative to save.
There are other implications. The basic-rate tax band has been squeezed considerably in recent years, leading to ever more people paying higher-rate tax.
So it will not just be high earners who lose. In fact, more than 5m workers could be hit – many of them on fairly modest incomes.
The gradual lowering of the higher-rate tax threshold also means more people could end up paying higher-rate tax on their pensions when they retire.
This will throw an old equation on its head. Many middle-income earners could at one time expect to get higher-rate tax relief when they saved and pay basic-rate tax when they retired.
Some could, under Labour’s plans, get basic-rate relief while in work and then pay higher-rate tax on their pensions.
Looking at higher-rate tax relief is a sensible option, but simply snatching it away is an ill-considered gimmick.
Keeping tabs on Invesco’s funds
A note from Hargreaves Lansdown on Mark Barnett’s planned approach to Invesco Perpetual’s Income and High Income funds gave me pause for thought.
The maximum weighting in any one stock will be reduced to 6 per cent and the number of holdings from 120 to 80.
No further money will be invested into smaller, unlisted companies already held.
And the number and weight of medium-sized companies will be increased to play towards Mr Barnett’s expertise.
This suggests that these funds will have a very different look in a year or so. It also suggests that Mr Barnett’s view on how to run an income fund is rather different to Neil Woodford’s – in fact, far more different than we had originally been led to believe.
Could these changes propel the funds towards the more mundane end of the investment spectrum, both in terms of risk and performance?
Tony Hazell writes for the Daily Mail’s Money Mail Section. He can be contacted at t.hazell@gmail.com
