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Ethical ISAs

What is an Ethical ISA?

Invest in line with your principles

Investment Fund Supermarket ISAs

Future World Ethical ISA

from Legal & General

Allows ISA Transfers
  • Fund Choice: Managed Ethical Investment Funds
  • Invest From: £20 per month or £100 single

Why we like it: The Future World fund range range allows you to invest in funds that seek to make positive change. The Gender in Leadership UK Index Fund tilts the investments in the fund towards companies with better gender diversity, while the Future World Climate Change identifies companies that are critical to the shift to a low-carbon economy and are paying special attention to their actions.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

UK Ethical Fund

from Standard Life

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Invest via Fidelity Funds Supermarket & get a discount when you buy this fund
  • Invest From: £50 pm

Why we like it: The UK ethical fund aims to provide long term growth by investing in a diversified portfolio of UK equity assets that meet Standard Life's strict ethical criteria. Current areas of exclusion include alcohol, tobacco and companies deemed to cause environmental damage - the latter typically rules out most oil and mining stocks. Fund manager Lesley Duncan has an extensive track record in both UK equity and ethical investing, having taking over the reins of this fund in 2004.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Ethical Equity

from Kames Capital

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Invest via Hargreaves Lansdown fund supermarket to access this fund
  • Invest From: £25 per month or £100 single

Why we like it: Investing ethically often involves avoiding certain companies or sectors. These constraints mean striking a balance between investing ethically and delivering strong performance is no easy task. The fund manager Audrey Ryan is one of few fund managers who have handled the constraints of an ethical fund well over the long run.

Important: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

What is an Ethical ISA?

An ethical ISA is an ISA where your money is used to invest in green, eco-friendly and ethical funds. You can invest ethically and still make money. Ethical ISAs allow you to invest in a socially responsible manner and have more say about where your money is invested. In this day and age, more and more people want more control over where their money is invested.

Ethical ISA funds are used to invest in unit trusts, gilts, the stock exchange, life assurance and many other similar ventures. They are most suitable for people who are willing to leave funds in their ISA for long periods such as five years. They are also good for people who are willing to withstand a bit more fluctuation in the value of their fund.

What Funds are Likely to be Excluded in an Ethical ISA?

While this varies from provider to provider and some are more ruthless than other, generally the following are excluded, funds derived from:

  • Tobacco
  • Alcohol
  • Pornography
  • Gambling
  • Fur trade
  • Armaments

Some also exclude: Oil and mining companies due to environmental concerns and human rights abuse

Some companies don’t necessarily exclude all funds associated with these industries but instead look at each fund individually and assess the track record of that particular company in terms of their human rights or green issues.

Why Choose an Investment ISA?

An investment ISA can be a good way to put aside some money each month or invest some extra cash. This kind of account is not advised if you don’t have any other savings or are in debt because you won’t be able to access your money easily if you need to and you could make losses.

However, Investment ISAs have the potential to provide better returns than any other savings account.

Some things to consider include:
  • Assess the level of risk you’re willing to take, most providers can filter assets depending on the level of risk you’re willing to take or even provide you with a ready-made portfolio
  • Low risk investing tends to focus on bond funds which pay interest or dividends regularly, whereas higher risk portfolios tend to focus on property investment and the stock market
  • Decide if you want an Ethical ISA which completely bans all funds from companies such as tobacco etc. or would like a lighter approach
  • Providers often hold a limited amount of carefully selected options to invest in whereas others have a much larger range of funds. Work out which is right for you
  • Some providers have a simple interface with clear copy about each investment and its past performances. Make sure you find one that you find easy to use, helpful and clear

Currently, you are able to invest anything up to the tax threshold and choose to have it spread across a Cash, Stocks and Shares and Innovative Finance ISA or consolidated within one account.

As you can only fund one Ethical ISA per tax year it’s a good idea to shop around before you make your choice

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

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