You are using an outdated browser. Please upgrade your browser to improve your experience.
Article | 08 February 2018 | Investments
The ethical sector is showing positive signs of growth and investors are increasingly taking ethical investing into consideration when making investment decisions.
Investors remained fairly cautious in 2017 preferring fixed income over equities, typically seen as a lower risk and less volatile asset class. From a UK perspective this is understandable and investors avoided UK equities based on a number of concerns. Brexit negotiations were rarely far from the headlines and there seemed little positive news on that front. While the Government, following a disastrous election, has looked in disarray. To make matters worse, the UK economy was slowing and slumped from being one of the best performing economies in the G7 to the worst.
Despite this the UK stock market had what, in most circumstances, would be considered a good year. Although it lagged behind its peers as synchronised global growth drove equity markets higher.
The ethical sector is showing positive signs of growth and investors are increasingly taking ethical investing into consideration when making investment decisions. Ethical investing has struggled in the past as managers were forced to avoid many strongly performing sectors and had little opportunity to invest in companies with a focus on positive change.
That is beginning to change as investors and companies see the importance of running sustainable businesses, whilst technology has created a new generation of businesses which are challenging the established thinking and leading with a more ethical mindset. The use of technology also means that many ethical funds are now not as restricted as they once were and are able to compete better on performance.
Within the equity sectors, there was a clear trend to avoid the more expensive equity markets such as the US and focus on the recovering sectors including Japan and Europe, where the economic outlook has been improving and valuations are not seen as expensive, especially given the potential for further corporate earnings growth.