What is SRI?

Socially responsible investing - known as SRI - is the modern face of ethical investing. We explain how an ethical fund can legitimately invest in mining stocks and banks

Emma Wall 14 October, 2013 | 4:42PM

Read more on ethical and sustainable investing in Morningstar's Ethical Investing Week 2013.

Traditionally, ethical funds used to take a hardline approach to what they invested in, but the sector has evolved in line with its catchphrase “socially responsible investment” (SRI).

Rather than screen out stocks, funds that follow the SRI route take a more positive approach, investing in companies that adopt good environmental and social practices regardless of sector. This gives managers a wider choice of stocks, which can help boost returns and reduce volatility. It is also why ethical funds have such diverse holdings – while traditional funds will concentrate on renewable energy firms, ethical funds such as Aberdeen Ethical World invests in Vodafone (VOD), Centrica (CNA) and PepsiCo (PEP).

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Centrica PLC46.63 GBX-2.00
PepsiCo Inc137.56 USD-0.39
Vodafone Group PLC118.68 GBX-1.30

About Author

Emma Wall  is former Senior International Editor for Morningstar

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