Ethical investment trusts often avoid investing in industries such as arms, tobacco and nuclear power. They also often invest in ‘positive’ companies such as pro-environmental businesses and fair trade companies.
But why should you choose a green investment trust? And how do you go about picking the right one?
Why invest into an eco investment trust?
More and more people are taking an interest in environmental issues and the social and corporate policies of large corporations.
So, if you are interested in an investment that offers the potential of a good return without compromising your principles, so-called ‘fair trade investment trusts’ may be the answer.
These types of investment trust generally avoid investing in companies which are involved in areas such as arms, genetic engineering, animal testing, tobacco, alcohol, gambling, intensive farming or nuclear power. So, you can be assured that you’re not helping to fund any of these areas when you invest.
Some investment trusts specifically invest in environmental companies. A green investment trust will typically invest in businesses involved with carbon offsetting, waste management and renewable energy.
Other specialist investments include charity investment trusts and fair trade investment trusts.
Helping you to choose the best ethical investment trust
The most important factors to take into account when choosing an ethical investment trust are:
- Where the fund invests
- The ethical investment trust performance
- The ethical investment trust prices charges and fees
Different investment trusts invest in different sectors. So, when choosing an eco investment trust it is worth researching exactly what companies and sectors the trust invests in.
It is also worth comparing the ethical investment trust performance. While this is no guarantee of future performance, looking at how an ethical investment trust has performed over recent years can give you an indication of whether it is better or worse than other similar investments.
Finally, it is important that you compare ethical investment trust prices, charges and fees.
You will generally pay a commission when you invest in your investment trust and you will typically pay an annual management charge.
Make sure you compare these fees before you sign up as high fees can reduce your potential returns.
