Robo adviser offers ethical investment options

Wealthify to offer range of ready-made ethical portfolios

Robo-advice website Wealthify is to offer ethical investment portfolios. Investors will be able to access five different ethical portfolios from as little as £1.

Wealthify is to offer five different portfolios of varying risk levels: cautious, tentative, confident, ambitious and adventurous. Four robo-advice websites now offer ethical options, the others are: Moola, PensionBee and Wealthsimple.

Research by Boring Money found that almost three-quarters of investors are interested or potentially interested in ethical or socially responsible investing. Younger investors are particularly interested in investing in line with their principles.

Wealthify’s portfolios will invest in a mixture of exchange-traded funds and mutual funds, containing shares, bonds and thematic investments with exposure to regions including the UK, US, Japan, Europe, Asia Pacific and emerging markets.

Holdings within the portfolios will include active funds such as Kames Ethical Corporate Bond, Royal London Ethical Bond and L&G UK Ethical Trust, as well as ETFs including Vanguard US Government bonds and iShares MSCI Japan SRI.

Funds backed by the portfolios will incorporate both negative screening, which rules out so-called sin stocks, and positive screening, which seeks out businesses demonstrating strong environmental, social and governance practices.

Wealthify will also employ its own ongoing screening to monitor the portfolio holdings.

The portfolios will cost between 0.42 per cent and 0.69 per cent to invest in – higher than Wealthify’s typical fee of 0.21 per cent. It says this is because ethical funds are typically more expensive due to the extensive research and monitoring carried out by fund managers.

The cheapest option is the cautious portfolio, which will have total annual charges of 1.12 per cent, and the most expensive is the adventurous portfolio, with total costs of 1.44 per cent. This includes Wealthify’s standard annual fee of 0.7 per cent for those with up to £15,000 invested.

Rebecca O'Connor, founder of Good with Money, says: ‘The sustainable investing movement is truly gathering pace, with more demand from customers and more competition among fund managers and investment platforms. 

‘Wealthify has clearly put a lot of thought into this option. The funds it has chosen are well-regarded both for living up to their sustainable or ethical aims and for their financial performance. Overall, this looks like a great addition to the growing number of options for people with a more enlightened approach to what their money can do, without sacrificing personal returns.’

Michelle Pearce, chief investment officer at Wealthify, says: ‘We want to democratise investing and give our customers the opportunity to invest in line with their principles. The fund providers we have chosen are best of breed in their relevant sectors of ethical investing.’  

The process of creating an ethical investment plan remains the same as Wealthify’s current investment process; investors will have the option to “make it ethical” via a simple switch when creating their investment plan, altering the pool of funds Wealthify uses to build and manage their plan.  Customers will be able to toggle the ethical switch on or off, making it easy for them to compare the cost implication of choosing the ethical route.

While the screening policies will vary between funds, they will aim to rule out weapons, gambling, tobacco and adult entertainment, with other considerations including animal testing, human rights and climate change.

Holly Mackay, managing director at Boring Money, says: ‘We definitely note growing interest in ethical investing and we anticipate this will become a mainstream product offering in the next 12 months. A key challenge for providers will be communicating all the nuances of the various flavours of ethical-type portfolios to people in a clear, accessible way.’ 


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