What’s different

what makes 3D Investing special

Ethical or socially responsible investment portfolios often sound great in theory, with pictures of wind turbines and someone to look after your money so you can sleep easily at night, but the reality is sometimes disappointing. Here’s why 3D investing is very different to this:

Fully transparent so you can trust it

Typically, ethical funds profile companies with positive attributes but say little about more controversial holdings.   This gives a misleading impression that the fund is predominantly invested in socially progressive companies when this may not be true.  Investors need to be aware of issues that might cause them concern, so that they can make an informed judgement on the fund as a whole.  This requires a very high level of transparency.  3D investing actively seeks to be fully transparent and to identify any potential areas of concern so that investors are aware of any social compromises and can make informed judgements as to social suitability.

Makes a positive social impact

The proportion of ethical funds investing in social or environmental solutions is often low, so your money isn’t actually doing that much good.  Too often funds are full of very large shares that have little obvious ethical merit and invest relatively little according to the espoused ‘positive criteria’ of clean energy, recycling and the like.  3D investing measures how much of each fund is invested in companies providing social solutions so it’s clear how much of the fund is invested in socially beneficial activities. We can then identify those funds with a relatively high social impact, enabling investors to make a real difference with their money.  It also enables us to measure the impact of a whole portfolio of funds, so that investors know how much of their money is actually making a positive difference.

What’s hiding behind the picture?

Reduces risk through alternatives

Portfolio managers virtually all claim to spread risk by appropriate asset diversification, but this often comes down to a simple split between bonds and equities, with little or no allocation to alternatives. 3D investing offers a much wider choice of assets including microfinance, social property and infrastructure.  These ‘alternative’ assets are relatively uncorrelated with more traditional investments, being less directly influenced by supply and demand of the main market.   They may also be underpinned by predictable, long-term revenue streams that makes them financially attractive, especially for income seeking investors.  As part of a diversified portfolio, they can, therefore, contribute to reducing overall risk.

Seeks to inspire investors

Investment is commonly reduced to facts and figures. Indeed some investment analysis discusses numbers without even stating what the company does!  Socially motivated investors are rarely persuaded by discounted cash flows or P/E ratios, and unlike more conventional investors, often want to know a lot more about what their investments actually do.  3D investing therefore seeks to inspire investors, to get investors excited about their money and what it can achieve.  This means extensive profiling of investments, impact analysis and regular reporting.

An investor meets an investee!

A ‘good’ investment

Ethical investment is often reduced to generating investment returns from a limited universe of ethically screened stocks or funds.  This isn’t a great sales message, nor does an ethical badge mean that it delivers much by the way of social impact.  By way of contrast, 3D investing  seeks to deliver market returns by investing in a broad portfolio of well managed funds, all of which have a demonstrable positive social impact.

Long term investment

The average holding period of equities is measured in months rather than years.  Managers are typically judged on a quarterly basis, when it’s broadly recognised that time frames of less than three years are hopelessly inadequate for judging financial performance.  This makes ‘investing’ more like a trade than a true investment, with investment being made for valuation reasons rather than longer term fundamentals.  There is no social value to this.  3D investing therefore holds investments on a long-term basis and does not seek to change them unless there is a fundamental change in outlook or the needs of the investor.

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The information in this website is aimed at UK Investment Professionals (i.e. regulated firms) only. Any persons who do not fall within the definition of Investment Professional should not use or rely on the information in this website and should seek professional advice regarding their investments.