But choosing ‘ethical’ firms to invest in is not always as simple as ‘good’ or ‘bad’
Ethical bank Triodos is branching out into green investment with the launch of two funds. People can choose between supporting companies doing innovative work in the field of sustainability – combating climate change, encouraging healthy living and so on – or household-name brands delivering “superior social and environmental performance”.
Both funds can be held within a stocks and shares Isa, and mean more choice for those looking to invest their cash in a socially responsible way. However, Triodos looks set to spark a debate over just how “ethical” some of these companies are after it emerged that one of the funds invests in several major names that have been sharply criticised for alleged tax avoidance, including Google and Starbucks.
Netherlands-based Triodos Bank has been operating in the UK for 18 years and describes itself as “a world leader in ethical and sustainable banking”. However, this is the first time it has offered stock market-linked investments to UK small investors.
Of Triodos’s two new funds, Sustainable Pioneer is the greenest – it is a global fund investing in smaller and medium-sized companies involved in sectors such as sustainable energy and medical technology. Only those companies deriving more than 50% of their revenue from climate protection, healthy people or clean earth themes are eligible. Firms that are way ahead of the pack on corporate social responsibility will also make it in. Companies in its portfolio include beauty products firm L’Occitane, US-based natural and organic food company Annie’s and Smith & Nephew – Europe’s leading maker of artificial hips and knees.
Triodos Sustainable Equity is arguably a more “mainstream” fund, investing in companies “that combine a strong financial position with solid social and environmental performance”.
It includes plenty of the sorts of companies you might expect – natural and organic food retailer Whole Foods Market, Japan-based bicycle parts manufacturer Shimano, Canadian National Railway and several solar firms – but also some that might raise eyebrows, such as sportswear brands Adidas and Nike, car manufacturers BMW and Volkswagen, drinks giant Diageo, and a couple of banks, including Dutch group ING and National Bank of Canada.
The fund’s biggest holding is Google, whose chairman Eric Schmidt was this week defending the search engine’s tax avoidance policies after it paid just £6m in corporation tax in the UK in 2011. The second and ninth largest holdings are telecoms giant Vodafone and coffee chain Starbucks, two of the most high-profile companies caught up in the tax avoidance accusations.
But Triodos says both funds operate strict minimum standards on a variety of issues, with zero tolerance on arms, nuclear power, hazardous materials and “unconventional” oil and gas.
The funds have been available in Europe for several years and, performance-wise, the Sustainable Equity fund has done well of late, delivering a return of 14.3% over the past year. It has outperformed its benchmark over one and three years. Sustainable Pioneer delivered a return of 9.2% over the past year, but has underperformed over one, three and five years (these figures relate to a euro share class that won’t be available to UK small investors).
Until 28 June, Triodos is offering a 1% discount on the funds’ initial fee, taking it down to 3%, after which it will revert to 4%. The annual management charge is estimated as 1.25% for Sustainable Pioneer and 1% for Sustainable Equity, and the minimum investment is £1,000 per fund (there is no monthly savings option).
However, some may be disappointed to learn that Triodos has decided to launch its funds on a “direct only” basis which means that, for the time being at least, they won’t be available via online fund supermarkets and platforms operated by companies such as Hargreaves Lansdown, where you can buy and manage funds at low cost. You can go on to the bank’s website and request an application pack.
The good news, though, is that you can invest tax-free in a Triodos ethical stocks and shares Isa. If you haven’t used your Isa allowance for this year, you can invest up to £11,520 in 2013/14.
There are dozens of ethical funds to choose from. If you are thinking of taking the plunge you need to decide on your personal priorities. Secondly, do you want to pay a financial adviser to help, or do you feel confident enough to do it yourself? The Ethical Investment Association website (ethicalinvestment.org.uk) allows you to find specialist advisers in your region.
Traditional ethical funds typically use a combination of negative screens (to eliminate arms manufacturers etc) and positive screens to favour businesses with a good record on corporate social responsibility or that are involved in environmentally friendly or low-carbon industries. But, as the ongoing tax avoidance debate has shown, some would say it is not always possible to put a company into a simple “good” or “bad” box.
When 21-year old Tom Pszeniczny decided to make his foray into investing, he figured Apple was a pretty safe bet.
Continue reading here: I lost $2,000 on Apple, but still betting on recovery
Investing in startups is exciting, but don’t put in more than you can afford to lose.
See the article here: Investing in startups: More fun than profit
Profit made on investor’s capital injection during the 2008 crisis turned into shares
Legendary investor Warren Buffett will become one of the 10 largest investors in Goldman Sachs after the profit he made on his capital injection into the Wall Street firm during the 2008 crisis was turned into shares.
Buffett’s Berkshire Hathaway investment vehicle saves billions of dollars in upfront costs through the profit on warrants being turned into 9.6m Goldman shares – astake of about 2%.
“We are pleased that Berkshire Hathaway intends to remain a long-term investor in Goldman Sachs,” Goldman Sachs chief executive Lloyd Blankfein saidt.
Buffett, in the same statement, affirmed that Berkshire intended to retain a “significant investment” in Goldman.
Berkshire received the warrants in 2008 after investing in Goldman during the depths of the financial crisis in what was seen at the time as a vote of confidence in the bank.
Survey shows majority think investing in stocks is a bad idea, and that those who think economy is poor outnumber those who think it’s good by more than two-to-one.
Original post: Americans still doubtful about stocks, economy
- More than 40 per cent of Canadians admit they are not confident investors
- Only 16 per cent are very familiar with their specific investments
- BMO: Successful investing does not necessarily require ‘Luck O’ the Irish’
Visit link: REPEAT: BMO St. Patrick’s Day Study: Irish Eyes Are Smilin’ When You’ve Mastered Investing Basics
Investors in the Fidelity China Special Situations fund will hope Bolton’s confidence in Chinese consumer spending is justified
Anthony Bolton’s stellar reputation as a fund manager took a dip when tens of thousands of small investors piled £580m into his Fidelity China Special Situations fund three years ago – and then lost a quarter of their money. But after a rally in the Shanghai and Hong Kong stock markets, the fund has made up nearly all its losses. Will 2013 be the year when Bolton finally starts to deliver?
The launch story for the fund in 2010 was seductive. Bolton was convinced a consumer revolution would follow China’s industrial revolution, and invested in the type of consumer-friendly stocks that would benefit. But after an initial surge, which took the share price from £1 to £1.25, his fund fell to a low of 70p, a drop of over 40% and a significantly worse performance than the China index. In perhaps the most embarrassing failure, one of Bolton’s investments, China Integrated Energy, lost 90% of its market value.
But the last three months have been kinder to Bolton. China Special Situations’ share price has jumped from 70p in September last year to touch 98p in recent trading, or just a whisker from its 100p initial price three years ago. His biggest holding, Tencent, an internet company that has more than 700m active users of its instant messaging service and up to 145m on the system at any one time, has seen its share price rise from HK$200 to HK$280 over the past year.
Bolton is convinced the recovery is not just temporary. “This year there are a lot of things that are aligned positively,” he says, citing the once-in-a-decade leadership change, with the president Hu Jintao passing control to Xi Jinping and a revival in economic growth with credit surging but inflation remaining under control. “After a long period in which people have been withdrawing money from Chinese shares, the money is now coming back. It is helping the parts of the market that have hurt me most. The small companies that dominated the downside will help me most in the upturn.”
New curbs on China’s overheating property market have sent stock prices in Shanghai downwards in the past two weeks (and the Fidelity fund has fallen back to 93p), and many economists are fretting over rising inflation. But Bolton says: “I wouldn’t put too much emphasis on the changes to property taxes, which have been in the pipeline for some time, and I think inflation is 2014′s problem, not this year’s. There is unlikely to be any real tightening [interest rate rises] until next year. What I’m interested in is the long-term change in China as it moves from investment to consumption. If you look at the degree to which wages are rising, that very much underwrites the consumption story. The demand side of the economy is looking fine.”
One sector where Bolton is hoping to capitalise on increased consumer spending is airline companies, and he has been building up significant holdings in China Southern Airlines and Air China. China Southern, although virtually unheard of in the UK, is the world’s sixth biggest airline, carrying more passengers than British Airways, Air France or Ryanair. “I don’t normally like airline stocks, especially in the west, where there is so much competition from budget airlines. But in China it’s different, with a heavily regulated market and just three players serving a market where there is a huge desire to travel, both domestically and internationally.”
The blow-up at China Integrated Energy has not deterred Bolton from investing in power companies. He reckons that a difficult time for power companies, which have been unable to pass on rising costs of coal and other raw materials, may now be over. He likes Huaneng Power International, which he believes will benefit from recent falls in coal prices. He is also investing in what China hopes will be a shale gas revolution akin to that in the US – but Bolton prefers the companies supplying services to the explorers rather than the explorers themselves, investing in Anton Oilfield Services and SPT Energy Group. Since October last year, the share price of SPT has doubled while Anton is up 150%.
However, the bit of China we see most in the west – its enormous export machine – is about the worst place for investors, says Bolton. “The exporters are being squeezed by a stronger currency and higher wages,” he warns.
Independent investment adviser Jason Hollands of Bestinvest.co.uk says the revival of Bolton’s fund is welcome news, but it is not in the clear just yet: “The launch of Fidelity China Special Situations was, to say the least, ‘unfortunate’ in its timing as it has had a torrid first couple of years both as a result of a weak market and underperformance of the trust against the index. But there is some scope for optimism. More recently the fund has had a very strong six months and the medium-term outlook for China has also improved as fears of a ‘hard landing’ for the Chinese economy have subsided, the leadership transition appears to have gone smoothly and latest wave of infrastructure spending will boost economic data. Of course, China is not out of the woods yet, with a key concern being the risks linked to its shadow banking system.”
Comparing price levels today to some arbitrary date in the past isn’t what investing is all about.
Read the original post: The case against stocks is soooo boring
CEO Tim Cook had called attempt to force tech giant to redistribute $137bn cash reserves ‘a silly sideshow’
The activist investor David Einhorn has dropped a lawsuit against Apple that the company’s CEO repeatedly called “a silly sideshow”. Einhorn, however, had already won his point and is likely to continue to put pressure on Apple to release its $137bn (£91bn) pile of cash, much of which is held overseas.
The story of the lawsuit is a circuitous trip through the sometimes complicated, often public disputes that activist shareholders have to wage in order to change companies. Activist investors, including Einhorn, usually use these methods to boost a company’s stock. Apple stock has lost about 30% of its value in only six months, and Einhorn hopes that returning cash to shareholders will help Apple win goodwill and reverse the damage.
“I don’t like it either,” Tim Cook, the Apple chief executive, said earlier this week of the company’s share price. “Neither does the board or management… but we’re focused on the long term.”
Einhorn is pushing Apple to reduce its $137bn cash pile by issuing a form of stock to its investors known as “permanent preferred”, which Einhorn has dubbed “iPrefs”. The iPrefs would pay shareholders $2 a year in dividends, as long as the company is in business.
Preferred shares are stock that has some of the characteristic of bonds. Unlike most big companies, Apple does not issue debt or sell bonds. The company does not need the money, but some investors believe that going bond-free leaves Apple out of a booming market for corporate finance.
Einhorn used the lawsuit as a temporary measure to stop an Apple shareholder vote, known as Proposal 2, that would have placed the decision on iPrefs in the hands of Apple shareholders. Shareholder battles are expensive and can take months. It is key to Einhorn’s battle to be able to put pressure on the company’s management. Apple had plans to let its shareholders vote to on any decisions on issuing preferred shares. Einhorn insisted that management should make the decision instead. Apple included the question on a ballot with four other decisions. Einhorn wanted them to be separate.
A federal judge granted Einhorn a victory last week in his lawsuit, issuing a preliminary injunction against the company that forced shareholders to ignore Proposal 2. At Apple’s shareholder meeting on Tuesday, Proposal 2 never came up for an official vote. The powerful California pension fund Calpers, which disagreed with Einhorn’s crusade, contended that unofficial numbers showed that the vote would have carried the day. On Thursday, the judge suggested that the lawsuit had accomplished its purpose and should be discarded.
Apple has said it will consider options for its large store of cash, but repeatedly dismissed Einhorn’s lawsuit. In the past two weeks, has Cook called the lawsuit a “silly sideshow” and suggested that Einhorn should give the money he spent on the lawsuit to charity instead.