Thoughts on this ethical SIPP portfolio?

zolou

i have a small amount in p2p and did look at Abundance some years back (you could also look at Triodos Bank an ethical bank who also crowdfund projects and also have ethical funds) At the time it struck me that many of their projects can run over 10 years or more and there was not much of a secondary market if you wanted to sell.

Good point about the liquidity, though Abundance has a marketplace which seems active, and I think this might be OK for a small proportion of retirement funds - though from the comments on the forum, maybe a renewable energy fund would be a better way to go.

I had a look at a couple of Triodos funds through Interactive Investor, but they were risk 5 (Triodos Sustainable Equity) and 6 (Triodos Pioneer Impact), and the investments of Sustainable Equity turned out to be things I hadn't expected - Central Japan Railway, Roche, Cisco, Bridgestone, Walt Disney etc. These aren't particularly feel-good investments for me and didn't tally with my image of the Triodos brand.

While there is no guarantee in the future its the same(or which does better in performance) but i would think there is better liquidity in the funds mentioned in post #4 and to which you could also add Greencoat Uk wind,Bluefield Solar or Foresight solar as worth looking at but thats not a recommendation.But being investment trusts make sure you are happy with any fee's on the fund
Have also mentioned before for an eco outlook but a bit different to the above funds Impax Environmental Markets IT which i am in and there is also Jupiter Green IT

It's great to have some positive suggestions to add to the (also welcome) cautionary notes people have been sounding, many thanks. I had a Foresight VCT (originally Keydata Income) which I bought for £3K and sold recently for around £460, so I probably wouldn't go for anything bearing that name. I had 40% tax back and dividends over the years, so the amount I lost wasn't actually that great and was probably worth it for the lesson in investment I learnt!

AnotherJoe

zolou wrote: »

>


> why so much in bonds? Whats your investment horizon?

3 years from retirement, then drawdown, so between 3 years and (hopefully) several decades. The stockmarket feels like very unsure footing, and especially unreliable given the climate prognosis - I'm having trouble getting my head round the idea of trusting something as important as one's retirement livelihood to it. Of course bonds aren't safe either in that context, but perhaps I was just reassured by the lowness of the risk number.

Where else would you go than the stock market? You could be invested for 30 years maybe you are too cautious with 70% bonds even before you've retired ? ? But you don't get your money back from me if there's a crash tomorrow:D

dunstonh

It's odd that Abundance have a SIPP at all, given what you describe as a lack of due diligence

SIPPs, historically, never had to do any due diligence. It was your job. That is why so many scams and dodgy unregulated investments ended up on SIPPs. However, that is changing and there have been some recent cases that have found against the SIPP provider.

Malthusian

zolou wrote: »

It's odd that Abundance have a SIPP at all, given what you describe as a lack of due diligence.

Not when you look at the name of the company that runs that SIPP for them. That would be a certain Gaudi, who also facilitated Beaufort and Greyfriars.

The stockmarket feels like very unsure footing, and especially unreliable given the climate prognosis - I'm having trouble getting my head round the idea of trusting something as important as one's retirement livelihood to it.

Then investing in unlisted startups via Abundance really does not compute. A diversified non-geared stockmarket investment has no relevant risk of permanent loss over the long term. That still applies for "light green" ethical investments with global and sector diversification, i.e. ones where the fund manager takes a load of money off you, excludes a few obviously icky companies like Imperial Tobacco and invests in mostly only slightly icky companies like banks or utilities.

Abundance investments all have a significant risk of total and permanent loss. Even if you spread your 10% across every investment that Abundance punts at you there is still a real chance of permanent loss.

It may be only 10% but you have to have a lot of money before you can simply shrug off the permanent loss of 10% and not think "why didn't I just stick it in the mainstream diversified setup that I thought was good enough for 90% of my money?"

Of course bonds aren't safe either in that context, but perhaps I was just reassured by the lowness of the risk number.

The problem with bonds is not so much that they are risky but that you are potentially not being compensated enough for the risk you are taking on.

Bonds can be expected to fall in value if and when interest rate rises are priced in. And corporate bonds will still fall in value during a crash when everything becomes correlated downwards, just not as much. Would a 15-20% fall feel that much better than a 25%-30% one?

The point of Modern Portfolio Theory is that by diversifying part of your portfolio into bonds, you reduce the volatility of your portfolio significantly without losing too much in potential return. But when your bond allocation is around 70% you are significantly reducing the potential return without gaining too much in reduced volatility.

There is also a psychological risk that after a few good years when your ethical bond portfolio has been trundling along and most investors have made twice as much as you in their more diverse portfolios, you will think "I really should have invested more in equities". The point at which you are mostly likely to think this is just before a stockmarket crash. That's how the maths works. Then when it crashes you may think "Why the hell did I do that" and sell the equities at a low point to switch back into bonds or dump them in cash.

Everyone thinks they won't fall for this stuff and most of them are wrong, that's why we have bull markets and crashes.

Malthusian

dunstonh wrote: »

SIPPs, historically, never had to do any due diligence.

Objection m'lud, SIPPs have always had to do due diligence. Common law duty of trustees. Which historically existed for over a century of legal history before there was any such a thing as a SIPP. A few of them ignored their legal duty, and their chickens have finally come home from Cape Verde to roost.

However long they spend their non-crooked competitors' money (which is what they are paying their lawyers with, thanks to future FSCS levies) on dragging their feet to the scaffold won't change centuries-old common law duties of trustees.