ESG and impact investing – did we make the right decision?

It’s six years now since we started to major on ESG and Impact investing, writes George Critchley, chairman at True Bearing. Was it the right decision? Has it worked for our investors? In 2016 we surveyed 160 of our investors and the results showed an overwhelming interest, but a lack of investor knowledge in how to go about it.

We began by giving our Independent Financial Advisers (IFAs) more training on the subject and we sourced investment portfolios that passed muster. John Fleetwood, one of the country’s foremost experts in this area, spent time advising us and we found his 20-plus years of research invaluable.

We began to realise, that as IFAs we had a responsibility to give good advice in this area of investing. The Good with Money consumer website lists True Bearing as being a national leader. Before Covid, interest in ESG and Impact Investing grew slowly. However nearly two years of lockdowns have concentrated the public’s mind, and now a determination to live in a better world is a common consensus.

More and more investors want some or all of their investments, to do some real good, not just make money. Don’t misunderstand, making money is still very important. It’s just that it would be best of all if both were achieved!

In broad terms, our positive investing has also produced positive returns. That said, January to June 2022 has been tough on investors with values down. If you had invested in the positive growth 5 portfolio on day one your journey would look like this, showing an overall almost 30% increase in just less than six years*:

What have we learned?

This investment movement is here to stay. In fact, it’s likely to be mainstream within the next few years.

Normal investing rules apply! It’s all about time in the market not timing the market. You must be in for the longer term. Some advisers suggest 5 years plus, but my preference is for at least 7 years.

Values will rise and fall with major world and economic events.

A broad basket of asset classes spreads the risk.

Be wary of fund management claims about the ESG of their funds. Much of it doesn’t stand up to scrutiny.

New technologies really are improving the world, and they present great investment opportunities.

Investors want information on the quantity and quality of the GOOD being achieved.

What’s next?

The rising popularity of these types of investment means that the Financial Conduct Authority (FCA), the body that regulates all financial advisers, is developing standards that will help protect investors. More and more IFAs across the country are now getting involved in ESG and Impact Investing.  At True Bearing we are expanding our number of ESG and Impact investment solutions and we will have more news for our clients by the year end.

* Figures quoted and graph are from the Positive Pennine 5 Portfolio. This is a medium risk basket of investment funds. All figures are net of both Adviser Charges and Discretionary Management Charges.

The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guide to the future. The views expressed in this blog represent those of the author and do not constitute financial advice. This blog should not be interpreted as advice to invest in a specific company or fund.