Tuesday, June 22, 2010

Doing well by doing good

These three SICAV (the European equivalent of an ETF) offer the opportunity of obtaining a fairly good performance by investing in development-oriented and socially responsible funds.

1. responsAbility Global Microfinance Fund, ISIN: LU0180190273, has managed to have a positive return in each of the past five years!

Overall it is up an annual average of 3.83 % in the past five years; not much, but much better than the markets! The fund's objective, according to its fact sheet, is "To invest its assets in securities with which financial service companies in less developed countries are financed and/or refinanced".


This one has had a less smooth ride (2008 was a bummer year), but overall it has also achieved a positive return in the past 5 years (+3.11 %).

According to Google Translate (a great tool!), "The Fund aims to beat its benchmark (75% EONIA + 25% DJ Eurostoxx) by allocating diversified equity and fixed income products selected in consideration of ethical criteria".

Does being ethical mean never having to say you are sorry?

Here is a Guide to Ethical Investing. "These charts show that you don’t necessarily have to sacrifice investment performance when investing ethically", it claims.

3. DWS Invest Africa LC, LU0329759764.

After a very bumpy start, this fund that invests primarily in Africa has had a gangbusters ride. It's "Tax Year Return" was 78.9 %!

It's investment objective is: "At least 70% of the sub-fund’s total assets (after deduction of liquid assets) are invested in shares, share certificates, participation and dividend-right certificates, and equity warrants of issuers which have their registered offices or their principal business activity in Africa or which, as holding companies, hold the majority of interests in companies registered in Africa, particularly in South-Africa, Egypt, Mauritius, Nigeria, Morocco and Kenya".

Africa may be the flavor of the month, but if you consider that it is a Region that has a huge need for capital investments, and a long way to go in developing their capital markets, there are many opportunities ripe for the picking.

In any case, I would advise you to devote at least part of your portfolio to socially and environmentally sustainable investments (also known as SRI).

Here is the definition from EUROSIF: "Socially Responsible Investment (SRI) combines investors' financial objectives with their concerns about social, environmental, ethical (SEE) and corporate governance issues. SRI is an evolving movement and even the terminology is still very much in the evolving phase. Some SRI investors refer only to the SEE risks while others refer to ESG issues (Environmental, Social, Governance). Eurosif believes both are relevant to SRI. SRI is based on a growing awareness among investors, companies and governments about the impact that these risks may have on long-term issues ranging from sustainable development to long-term corporate performance".

Considering the recent BP oil spill, and the huge liabilities faced by tobacco and chemical companies, perhaps they have a point.