Ethical stakeholder pension fund choices

square_one_2014

Does anybody know of a stakeholder pension with more ethical fund choices or is this roughly the sort of range that will be on offer elsewhere?

I am assuming that a stakeholder pension is still okay in the circumstances as the monthly investment is low.

Personal situation is this...

I set up a stakeholder pension via Cavendish for our little boy when he had just turned 1 in 2012 (£35 fee to set it up then 0.55% AMC).

It has a £50 per month Direct Debit set up.

I chose ten funds including five that were Alliance Trust 'Sustainable Futures' choices.

Now returning to look at the fund options today looking at the Aviva website series 2 options for pensions starting with code SM there seems to be 41 fund choices.

There are now seven Alliance Trust Sustainable Future / ethical funds.

The two we haven't already got are Alliance Trust Sustainable Future UK Growth and Alliance Trust UK Ethical.

I am thinking of altering the fund choices to have only these with the Sustainable Future Managed Fund (mixed investment 40-85% shares) making up 30% and the others 10% each.

currently:
10% Aviva Global Equity Income
10% Aviva Property
10% Aviva Alliance Trust Sustainable Future Managed
10% Aviva Alliance Trust Sustainable Future Corporate Bond
10% Aviva Alliance Trust Sustainable Future European Growth
10% Aviva Alliance Trust Sustainable Future Global Growth
10% Aviva Alliance Trust Sustainable Future Absolute Growth
10% Blackrock Aquila Over 15 years gilt index tracker
10% Blackrock Aquila Pacific rim equity index tracker
10% Blackrock Aquila US equity index tracker

dunstonh

Does anybody know of a stakeholder pension with more ethical fund choices or is this roughly the sort of range that will be on offer elsewhere?

No. Stakeholder pensions are a niche product that is largely overpriced in todays market. It was a basic product with basic funds. Any ethical fund offered was really only to suit the casual ethical investor and not a real ethical investor. Casual ethical investors tend to change their mind when they realise that ethical investments tend to underperform. Real ethical investors would not normally find a stakeholder pension ethical fund meets their chosen ethics.

margaretclare

I'm intrigued. What's a 'real' ethical investor as opposed to a casual one?

There are certain things I prefer not to put my money into. Tobacco, pornography and gambling. Am I real or unreal?

square_one_2014

So would a different type of pension be an option with only £50 per month investment?

I realise ethical investments tend to underperform but I don't feel comfortable investing a child's money in tobacco / alcohol / firearms / animal testing etc.

His Junior ISA invests in Kames Ethical Cautious Managed which I believe is a good fund of its type and I hoped the stakeholder pension would have had some further options like that but unfortunately not.

dunstonh

I'm intrigued. What's a 'real' ethical investor as opposed to a casual one?

A real ethical investor will have specific ethics. Things they will or will not invest in. All ethical funds have a grading criteria which allows them to be filtered in/out to match the chosen ethics.

A casual ethical investor will not have specific ethics and will just pick an ethical fund because it says it is ethical without actually knowing if it fits in with their ethics or not.

There are certain things I prefer not to put my money into. Tobacco, pornography and gambling. Am I real or unreal?

If you pick investments that actually filter out those things specifically then that is "real". If you just picked any old ethical fund because you dont want those things you wouldn't know if that fund matches you ethics or not and that is a very casual approach.

Ethical means different things to different people and ethical funds cater for different ethics. There are plenty of ethical funds which would not meet an ethical investors objectives.

square_one_2014

On reflection I don't think I am a casual investor really. I did spend time looking at ethical funds back in 2012. I had already read the Alliance Trust screening criteria prior to investing in those and the Kames screening criteria before investing in that as well as the fund factsheets and some ethical websites etc. I didn't see the words 'sustainable' or 'ethical' and just fill in the application forms without looking into it. It is difficult - there are issues - the area I am most conflicted in is animal testing (medicines not cosmetics but I'd prefer none in an ideal world).

Linton

square_one_2014 wrote: »

On reflection I don't think I am a casual investor really. I did spend time looking at ethical funds back in 2012. I had already read the Alliance Trust screening criteria prior to investing in those and the Kames screening criteria before investing in that as well as the fund factsheets and some ethical websites etc. I didn't see the words 'sustainable' or 'ethical' and just fill in the application forms without looking into it. It is difficult - there are issues - the area I am most conflicted in is animal testing (medicines not cosmetics but I'd prefer none in an ideal world).

Your 10%'s in Global Equity Income, Pacific Rim equity, and US Equity will make you the partial owner of a wide range of arguably unethical companies. If you are OK about these funds why focus so much on ethical funds for the other 70%?

square_one_2014

I'm getting rid of those due to trying to do it properly now, those are three of the original ten funds.

I fully acknowledge that in not picking ten ethical ones in the first place I undermined the ethical intention.

His Junior ISA is 100% ethical fund - I have no idea why I didn't make it 100% ethical for the stakeholder pension, actually quite annoyed with myself to be honest.

So my intended new composition is:
20% Aviva Alliance Trust Sustainable Future Managed
10% Aviva Alliance Trust Sustainable Future Corporate Bond
10% Aviva Alliance Trust Sustainable Future European Growth
10% Aviva Alliance Trust Sustainable Future Global Growth
10% Aviva Alliance Trust Sustainable Future Absolute Growth
10% Aviva Alliance Trust Sustainable Future UK Growth
10% Aviva Alliance Trust UK Ethical
10% Aviva Property
10% Blackrock Aquila Over 15 years gilt index tracker

getting rid of:
10% Aviva Global Equity Income
10% Blackrock Aquila Pacific rim equity index tracker
10% Blackrock Aquila US equity index tracker

thenudeone

Most pension companies have an ethical fund which can be chosen as one of the standard fund options, but as has been pointed out, ethical means different things to different people.

This may help with your research: http://www.ethicalconsumer.org/buyersguides/money/ethicalpensions.aspx

kidmugsy

I suppose an ethical investor in 1938 would not have invested in a Spitfire factory. Horrid warplanes!

margaretclare

kidmugsy wrote: »

I suppose an ethical investor in 1938 would not have invested in a Spitfire factory. Horrid warplanes!

In 1938 enough would have been known about the threat of another war and I would certainly have invested in Spitfires. I've been very 'iffy' about investing in the Far East because of destruction of rainforests and the effects that has. I try not to use Vietnamese coffee or anything containing palm oil, but it is far from easy to find out enough information.