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Socially responsible investing (SRI)

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If you are looking to invest in the stock market but want to make a positive impact on environmental and social issues at the same time, how do you decide which stocks or ETFs to invest in? Is this even a consideration when you are looking for investment opportunities?

 

Traditionally, investors used exclusionary screens to omit “sin stocks” in certain industries like gambling, tobacco or weapons. However disregarding entire industries can have negative effects on diversification and portfolio returns over the long run.

 

But now you can buy funds that include companies based on ratings system that consider factors ranging from environmental issues such as carbon footprint, to social issues such as gender pay equality. These scores are known as an ESG ratings, which are compiled by companies such as MSCI or Morningstar. ESG stands for environmental, social and governance.

 

Even though ESG investment products are generally more expensive, excluding companies who are big polluters or have poor working conditions can benefit fund performance. ESG strategies has proven to be very successful in Emerging Markets over the last 5 years.

 

Since the start of 2013, the MSCI Emerging Markets Index (M1EMS) is up 20.0% while the sustainable version - which omits badly behaving companies - MSCI Emerging Markets SRI Index (MXEF) is up 25.8%, an out performance of 5.8%!

 

Check out the full article here, and feel free to take advantage of the IG Community "Ask an expert" feature and drop me a question below. 

 

2017-10-30 15_56_26-Six of the best socially responsible ETFs _ IG UK.png

 

 

 

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    • yes they will be on less charts but I understand your point about the size of the moves in ftse, no harm in trialing them though you might find marking out the immediate prior high and low has more relevance.  
    • Yeah, I keep an eye on volume, that's why it's showing at the bottom of my chart However, I haven't been able to discover a strong relation between volume spikes and trend direction. Sometimes I see orders of the magnitude of 10-20k and the chart doesn't do anything special. Other times you see just average volume and the chart does huge turnarounds. For example what happened at 8.30 with that spike down and then going straight back up and making new highs vs previous candle? All happened on low volume
    • @jameswalker1 my recommendation is trade the demo account to get a better understanding of the costs associated. I traded demo for nearly 2 years before placing my first real trade. It will save you in the long run to get a better understanding of the costs involved.
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