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About 3d investing
Why 3D
Investing
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What Is 3D
Investing
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Performance
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Choosing 3D
Funds
3D investing takes many forms, but all
are different ways of reflecting whole-life values in your
investment planning. The principle ways of achieving this are:
Exclusion
3D investing started with ethical investment, which is
synonymous with excluding companies on the basis of their
transgressions. For many people, this is still a valid approach, as
the foundation of any socially motivated approach to investment is
to avoid the 'nasties' like tobacco, armaments or gambling.
The fund or the investor specifies the level of exclusion that they
wish to employ and a screening company applies that screen to the
investment universe to ensure that the specified criteria are
followed.
Tip - Its important not to be too restrictive or you could
end up with very little in which to invest. Just avoid the type of
companies in which you couldn't countenance any investment
regardless of the financial consequences.
Download Exclusion
Criteria
Thematic Investing
Excluding inappropriate companies only goes so far and can lead to
an investment portfolio that looks little different from
conventional funds. If you truly want to believe in your
investments, you will want a portfolio about which you can get
excited - investments that deliver solutions to the major
environmental and social challenges that we all face.
Thematic investing allows you to focus on investments that have the
potential for high social, environmental and financial returns,
since they are driven by social and environmental challenges such as
global warming, demographic change and pressure on resources.
Tip – These type of investments may expose your capital to
significant risk of loss, so you need to decide how much of your
overall investments that you are prepared to place at risk, given
the potentially high social and environmental returns.
Download Thematic
Criteria
Engagement
Engagement is an investment approach that seeks to bring about
change by influencing the companies in which investment is made.
Rather than avoiding companies because of the nature of their
activities, fund managers seek to engage with the companies in which
investment is made, using their influence as major shareholders.
This normally takes place by way of dialogue with senior company
management, but it can also take the form of shareholder resolutions
and as a last resort, disinvestment.
Tip – Many fund managers claim to exert some form of
influence on the companies in which they invest. Only a few commit
the resources necessary to systematically engage with companies on
social and environmental issues, and you can only judge how well an
engagement policy is implemented if this is reflected in a public
report on engagement activity.
Download Engagement
Criteria
Best of
Sector Investing
Best of sector or class investment generally means expressing a
preference for investments that demonstrate social or environmental
leadership in their industry. This allows fund managers to invest
without excluding whole industries, and also facilitates investment
in larger companies which may be excluded by a more restrictive
approach.
Tip – Check the actual underlying investments and the methodology
for selecting investments. Is 'best of sector' being used to justify
investments when the primary reason is financial? Have the fund
managers addressed all of the key issues in justifying 'best of
sector' status?
Download Best
Of Sector Criteria
Socially Directed Investing
Socially directed investments have a primary objective of improving
social or environmental welfare through business. Most investments
of this type may be difficult to sell and may generate modest
financial returns relative to the risk of capital loss. The primary
return is therefore likely to be social/environmental rather than
financial, although some investments of this type may also generate
a competitive financial return.
Tip – Decide how much of your overall investment portfolio that you
are prepared to commit to this type of investment and consider the
balance of risk / financial return / social return that you wish to
achieve.
Examples of Socially Directed Investments
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