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Ethical Portfolio

Ethical investing

Our Ethical Growth portfolio is designed to give investors an idea about how they can build their own diversified ethical portfolio. However, ethical investing is hugely personal: while one investment may fit with your views, another might not. So, we do appreciate that your personal values will determine the right ethical investments for you.

The portfolio is for investors looking to build their wealth over the medium-to-long term who wish to invest within a socially responsible investing framework.

Ethical investing does not have to mean sacrificing returns – as we explain here – but finding a pool of ethical investment options has been far from easy. Our ethical long list and ACE 30 rated options can help, and can be held in a Stocks and Shares ISA or SIPP.

The below table shows our Ethical Growth portfolio. It features ten different ethical investment funds, trusts or ETFs – nine of which are from our ACE 30 list – and shows:

  • The ii ACE ethical investing style - find out more
  • The current portfolio weighting of each one
  • The product cost (this includes the ongoing charge and any other costs associated with managing the investment, such as transaction costs incurred by the manager, and is a more accurate indication of the total annual costs, rather than just using the ongoing charge figure)
  • How a £20,000 investment would be allocated
Name ii ACE ethical style Portfolio Weighting Ongoing Charge (OCF) Product Cost Allocation of £20,000
Royal London Sustainable Leaders C Acc Considers 15% 0.76% 0.93% £3,000
BMO Responsible Global Equity 2 Acc Considers 10% 0.80% 0.91% £2,000
iShares Global Clean Energy ETF USD Dist GBP Embraces 8% 0.65% 0.72% £1,600
Fundsmith Sustainable Equity I Acc Considers 14% 1.05% 1.12% £2,800
Trojan Ethical Income Fund O Acc Avoids 10% 1.02% 1.20% £2,000
Impax Environmental Markets Ord Embraces 8% 1.04% 1.31% £1,600
Stewart Investors Glbl EM Sust B Acc GBP Considers 15% 0.98% 1.22% £3,000
Rathbone Ethical Bond I Acc Considers 10% 0.66% 0.72% £2,000
Syncona Ord Embraces 5% 1.83% 2.10% £1,000
Impact Healthcare REIT Embraces 5% 1.82% 2.12% £1,000
Total   100% 0.97% 1.14%* £20,000

* This is the combined figure for the portfolio, based on the current portfolio weighting. Data correct as at 31.12.2019.

A closer look at our ethical growth portfolio

We have included 10 investments in our Ethical Growth portfolio: nine from our ACE 30 ethical rated list and one other, Impact Healthcare REIT.

Our model portfolios comprise mainly rated investments with high return prospects but we sometimes need to look at other options to find a suitable diversifying asset.

These “alternative” investments – in this case Impact Healthcare REIT – can play important diversifying roles when building a portfolio, potentially mitigating losses when equity and bond prices fall.

Other portfolios

Our Ethical Growth portfolio is one of five portfolios put together by the ii team. Our other ii model portfolios include: active growth, active income, passive growth and passive income. Full details of our methodology, including how the full range of model portfolios are constructed and managed, as well as the full selection process can be found here.

The information we provide in respect of the ii Model Portfolios is an opinion provided by ii or one of its partners on whether to buy a specific investment or portfolio. None of the opinions provided are a “personal recommendation”, therefore you should ensure that any investment decisions you make are suitable for your personal circumstances. Past performance of the underlying constituents is not a guarantee of future performance. Remember, the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest.

What will it cost to buy and sell the model portfolios?

You will have to buy and sell each constituent individually. Lump-sum investment starts from as little as £3.99 online with ii, depending on the Service Plan you select. You can also invest monthly using our free regular investment service. A 0.5% UK stamp duty applies when you buy investment trust shares and government charges apply to some investments.

Ethical investing styles

Each fund, trust and ETF in the portfolio is placed into one of three key interactive investor "investment styles" which were carefully chosen to avoid jargon: Avoids, Considers and Embraces. Together these are referred to as our ii ACE ethical styles. Where a fund's manager adopts more than one style, we use the strongest ethical category that applies. In short:

Avoids Funds that focus on simply excluding companies, sectors or specific business practices.
Considers Funds that carefully consider an often wide range of ethical and/or environmental, social and governance (ESG) issues or themes when balancing positive and negative factors.
Embraces Funds that focus on companies delivering positive social and/or environmental outcomes.

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Past performance of the underlying constituents is not a guarantee of future performance. The value of investments, and any income from them, can fall as well as rise so you could get back less than you invest.

Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.

The information we provide in respect of the ii Model Portfolios is an opinion provided by ii or one of its partners on whether to buy a specific investment or portfolio. Please note that none of the opinions we provide are a “personal recommendation”, which means that we have not assessed your investing knowledge and experience, your financial situation or your investment objectives. Therefore you should ensure that any investment decisions you make are suitable for your personal circumstances.

If you are unsure about the suitability of a particular investment or think that you need a personal recommendation, you should speak to a suitably qualified financial advisor.

Any changes to the ii Model Portfolio constituents and the rationale behind those decisions will be communicated through the Quarterly Investment Outlook.

ii adheres to a strict code of conduct. Members of ii staff may hold shares or units in investments which make up the ii Model Portfolios, which could create a conflict of interest. Any member of staff intending to complete some research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.

In addition, staff involved in the production of the ii Model Portfolios are subject to a personal account dealing restriction. This prevents them from placing a transaction in these portfolios or the underlying specified constituents of each portfolio for five working days before and after an investment is included or amended and made public within the list. This is to avoid personal interests conflicting with the interests of the recipients of the ii Model Portfolio options.

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