When it comes to exploring investment solutions, the only way is ethics for Sue Round, group investments director and fund manager at EdenTree Investment Management.
However, financial advisers are failing to ask their clients to consider ethical or socially responsible investments, Ms Round said, adding that many clients are ignorant of the companies represented within their portfolios.
“Most financial advisers do not pose this question to their clients because they are scared of being asked a question that they simply cannot answer,” Ms Round said.
“We aim to support financial advisers by making a host of material available to them, including guides to help them improve their knowledge and give them the confidence to answer the difficult questions they may face.”
Critics of socially responsible investment funds argue that the restrictions imposed by this investment approach make them likely to underperform non-SRI funds. But Ms Round insists that this need not be the case: “The record says it all. You do not have to forsake performance if you invest in a socially responsible way. Our funds have shown you can get good results over the long term.”
EdenTree was established in 1887 as Ecclesiastical Investment Management, an insurer to the Anglican Church to protect churches and church buildings from fire.
The firm’s rebrand last July to EdenTree played down its religious heritage to better reflect its position on socially responsible investments.
Ms Round said: “We found that the Ecclesiastical name could be a deterrent. Some clients are put off by the religious element – especially charities that are not able to support faith organisations. We came up with a name that we think appeal to the masses while keeping an element of our brand’s heritage.”
Ms Round has been fund manager of the Amity UK Fund – one of six retail funds offered by the investment manager – since its launch 23 years ago. The £137.4m fund was one of the first socially responsible funds available to retail investors.
EdenTree’s ‘profit with principles’ approach means generating good returns in a responsible manner, according to Ms Round. It avoids companies involved in such potentially morally dubious areas as alcohol, tobacco and animal experimentation.
The investment manager also positively screens companies – meaning its funds will buy shares in companies that are not usually associated with ethical investments but have initiatives deemed to have a positive impact on such areas as the environment and healthcare.
An in-house team of analysts assesses the suitability of potential investments to determine whether they measure up to the company’s standards and values. This screening process is complicated by the subjective nature of ethical investing, according to Ms Round, who said: “We can’t be whiter than white, but we can make it clear what we invest in. It is not about us saying this is what you should do. I say if you have a problem with this area, then we will help you create a strategy that works for you.”