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What is ethical investing and how could you practice it?

There are several elements that people can take into account when creating or modifying their own portfolio. For example, which industries have the most promising future in the long term. Or, the short- or long-term performance possibilities, as well as what other market players do. But there are also those who are considering more personal ideas when choosing their assets. An example of these trends is in the so-called ethical investment.

What does this concept mean? Basically, it is about buying stocks, goods, currencies and other assets based on a personal moral code. Ethical investing doesn’t just look at which companies or resources could maximize returns in the short or long term. You also see which agents are making a positive change in their environment. Of course, this means that people, by growing their wealth, indirectly work for a better world.

According to Amundi, over the past 10 years, companies that invest in environmental, social, and corporate governance (ESG) or Corporate Social Responsibility (CSR) factors had an average performance higher than the rest of the market. The Motley Fool also references various experts who reinforce this theory. Among the most prominent brands, according to Investors, are EW, EQUIX, PLD, EME, CDNS and NRC.

How to practice ethical investing

It is important to say that there is no one way to adopt that style of financial growth. In fact, ethical investing has a myriad of aspects. You can focus on brands with a social responsibility, on sustainable initiatives, focused on the environment, impact projects or corporations that try to cover it all. There are also those who decide to create a portfolio where they exclude all those companies that do not have a clear program.

Others prefer to practice ethical investing only by excluding assets that explicitly negatively impact their ideals. The important thing to highlight is that this type of portfolio not only has a similar performance to other more traditional configurations. In Morningstar data, 66 percent of sustainable funds performed better than their conventional counterparts in 2019. Thus, there is a very significant growth potential.

How can people create their own ethical investment portfolio? On eToro-style platforms, individuals can not only design their own asset distributions, to choose exactly which companies to put their wealth in. It also has data, news and timely information from each of the markets on the platform. Thus, people will be able to more easily detect which brands and sectors are meeting their standards.

Choose which actions work best for your wealth

eToro is a regulated entity, in Europe by the Cyprus Securities and Exchange Commission and in the UK by the FCA. It is also registered with the CNMV within the Investment Services Companies section of the European Economic Area in Free Service. It also has the Australian ASIC regulation. CopyPortfoliosTM is an investment management service provided by eToro Europe Ltd., which is authorized and regulated by the Cyprus Securities and Exchange Commission. Your capital is at risk. CopyPortfoliosTM are a portfolio management product. CopyPortfoliosTM should not be considered as an investment fund in the stock market, nor as a hedge fund. This content is for informational and outreach purposes only and should not be considered as investment advice or recommendation. Past performance is not an indication of future performance.