The ethical investing debate is an ongoing one. Other than appeasing their conscience, advocates of ethical funds believe they may have an edge over their non-ethical rivals.
They argue that companies who keep to environmental, social and governance disciplines are more sustainable businesses through time. However, how easily can you attribute the ethical practices of companies to a portfolio’s performance? Companies do not operate in isolation. Their performance is influenced by their industries, other industries to which they are closely tied and the wider market. Performance is far easier to assess when considering the biases ethical funds carry. Most ethical screens limit managers’ universes and create portfolio biases that can heavily impact performance....
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