Energy Bond

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  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    abitsmith wrote: »
    Can anyone recommend a debt instrument that is ethical, safe and provides a halfway decent return? I'm not expecting 10% or anything like that, but stumbled across FRE in my search.

    I can ask my IFA but I will pay 3% for the guidance so I started looking for myself. I had planned to put my money towards buying a property, but given the trajectory of that market I thought it better to rent for a while and wait until prices drop a bit further.

    How are you defining ethical?

    Do you support nuclear power, with no carbon emissions, or solar and wind farms with local blight?

    Do you support tech firms paying near zero tax?

    Are you pro pharma, or do you prefer no new drugs and other health solutions?

    Rechargeable batteries with slave labour producing minerals in Africa and South America?
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    edited 11 November 2017 at 3:51PM
    abitsmith wrote: »
    Can anyone recommend a debt instrument that is ethical, safe and provides a halfway decent return? I'm not expecting 10% or anything like that, but stumbled across FRE in my search.

    Interest rates are low right now so you won't get much from fixed income where your principal is guaranteed. So you need to balance your desire for yield with your appetite for risk. You can get a bit more guaranteed return if you agree to lock your money up for some time....maybe 5 years.

    So on the safe end of things you could create a ladder of National Savings or other guaranteed savings bonds with terms out to at least 5 years......next you could look at Government backed individual bonds that you hold to term and investment grade corporate bonds........there's also P2P and then riskier and high yield bonds.

    I'm in the US and I have a friend who just bought a closed end high yield bond fund (PHK). It's yield is 12%, but you have to factor in premium and the NAV and it's very risky. For my guaranteed fixed income I'm happy to get 2% from a savings bond where I keep some cash and 4.38% from a deferred "annuity" {it's not really an annuity) that restricts access to my capital over a decade, but that's an old contract and not available anymore. I also use a bond tracker fund and reinvest all income. It's yield is 2.5% and YTD the return is 3.5%, but if interest rates go up its price will fall, so I don't plan on spending from it in the near future and just use it as a dampener on volatility and hope for a bit of long term gain.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    abitsmith wrote: »
    Yes my ethics are strange. I don't like the stock market very much because it places companies' legal responsibility to shareholders above customers, employees, the environment or the communities in which they operate and requires a permanent state of economic growth, which is inherently unsustainable. I would prefer to invest in bonds than equities is all.
    The companies' legal responsibility to bondholders is above that to shareholders, so your ethical stance is very strange.
    Actually shareholders, aka owners, are well down the list if things go wrong and the company is wound up.
    Eco Miser
    Saving money for well over half a century
  • Voyager2002
    Voyager2002 Posts: 15,278 Forumite
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    Two legitimate ways to invest in renewable energy and so benefit from schemes whose income is effectively guaranteed: Greencoat UK Wind and The Renewable Infrastructure Group. Both are investment trusts: I currently hold shares in the former and intend to buy some in TRIG. Greencoat offers a dividend equivalent to 5 per cent and intends this to increase with inflation. Obviously the price of the shares can and does vary (and could fall), but in recent years has shown fairly low volatility.

    And a big 'welcome back' to DunstonH!
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    Voyager2002 wrote: »
    Two legitimate ways to invest in renewable energy and so benefit from schemes whose income is effectively guaranteed: Greencoat UK Wind and The Renewable Infrastructure Group. Both are investment trusts: I currently hold shares in the former and intend to buy some in TRIG. Greencoat offers a dividend equivalent to 5 per cent and intends this to increase with inflation. Obviously the price of the shares can and does vary (and could fall), but in recent years has shown fairly low volatility.

    And a big 'welcome back' to DunstonH!

    Such niche closed end funds are going to come with significant risk. They are for the sophisticated investor and should only form a small percentage of a portfolio.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Voyager2002
    Voyager2002 Posts: 15,278 Forumite
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    bostonerimus wrote: »
    Such niche closed end funds are going to come with significant risk. They are for the sophisticated investor and should only form a small percentage of a portfolio.

    All risk is significant, and no single asset class should be allowed to dominate anyone's portfolio. Having said that, the figures that Morningstar publishes for the volatility of these shares (an accepted measure of risk) are lower than for most of the Funds and Unit Trusts that I have examined.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    Voyager2002 wrote: »
    All risk is significant, and no single asset class should be allowed to dominate anyone's portfolio. Having said that, the figures that Morningstar publishes for the volatility of these shares (an accepted measure of risk) are lower than for most of the Funds and Unit Trusts that I have examined.

    I'm sure you've done your research and I think we are in broad agreement. The portfolio is only within the UK and obviously political factors can be important when it comes to these energy schemes which is why they need to be carefully assessed.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • chrisgg
    chrisgg Posts: 68 Forumite
    abitsmith wrote: »
    Can anyone recommend a debt instrument that is ethical, safe and provides a halfway decent return? I'm not expecting 10% or anything like that, but stumbled across FRE in my search.

    It's going to be hard to tick all those boxes. Something like Rathbones Ethical Bond fund is probably as good as you'll get. Unless you're willing to hold Renewable Energy ITs or something like that.
  • Malthusian
    Malthusian Posts: 10,931 Forumite
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    abitsmith wrote: »
    I don't like the stock market very much because it places companies' legal responsibility to shareholders above customers, employees, the environment or the communities in which they operate and requires a permanent state of economic growth, which is inherently unsustainable. I would prefer to invest in bonds than equities is all.

    "Capitalism - Proudly Unsustainable for 250 Years and Counting."

    Eco Miser beat me to the point that bonds are even more unethical than equities, because companies' legal responsibility to bondholders ranks above their legal responsibility to shareholders.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    Malthusian wrote: »
    "Capitalism - Proudly Unsustainable for 250 Years and Counting."

    Eco Miser beat me to the point that bonds are even more unethical than equities, because companies' legal responsibility to bondholders ranks above their legal responsibility to shareholders.

    The whole idea of lending money and being paid interest was seen as unethical by Christianity (and still is in Islam) for many centuries.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
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