By Ron Robins

“If you are saving for your retirement in an ethical pension fund you might well expect to have a say in where your money goes. Our research shows that almost two thirds of funds do not actually ask their customers about their ethical preferences. This may go some way towards explaining why traditional ’sin’ stocks like porn, gambling and alcohol continue to be regularly screened out of ethical funds while issues like human rights and environmental protection are less likely to be addressed.”
–Matthew Butcher, December 8, 2012, FairPensions, UK

Yes, ethical funds should regularly survey their investors about their ethical preferences. However, I’m surprised that more ethical-SRI investors don’t just simply analyze their personal values and then with the help of a broker, find stocks that more closely mirror those values. And you can get reasonably good diversification with a portfolio of 10-15 stocks. Also, they’ll find their transaction costs a pittance compared to the MERs of funds and thus their long-term returns potentially higher. (Note: ethical ETFs usually have similar holdings to ethical funds, and have lower costs too.)

I believe what stops investors from doing this is that they are afraid of their advisors–who often can sell them only funds, not stocks–and they don’t know where to begin. See Creating A Profitable Personal Values-Based Portfolio.

December 8, 2012

–Ron Robins, Founder & Analyst – Investing for the Soul