Frequently Asked Questions
What is Socially Responsible Investing?
Socially Responsible Investing is a method of investing that takes into account the impact of a company on the world. Companies are evaluated on their triple bottom line, which takes into account not just the potential financial return, but also their environmental and social impact. It’s a way for investors to put their personal values into action, and help shape society.
The three main factors companies are screened on are Environmental, Social and Governance (or ESG for short) considerations.
What percent of my portfolio will be composed of the Socially Responsible Investments?
The percentage of Socially Responsibly Investments varies depending on your portfolio personalisation. If you opt in for Socially Responsible Investments, they will comprise between 20% and 75% of your portfolio.
SRI portfolios are made up of the same mix of asset classes as standard Collins House Online portfolios; Australian Shares, International Shares, Emerging Markets, Property, Enhanced Cash and Bonds.
However for SRI portfolios, we have selected different Australian & International Shares ETFs which are Socially Responsible Investments.
As the market demand for ethical investment products grows, we hope to see more products introduced to the market and to evolve our SRI offering as that happens.
How do Socially Responsible Investments perform?
A common concern is that socially responsible investing means having to sacrifice investment returns. There is a robust, and growing, body of evidence that this is simply not the case.
An analysis of 2,200 individual studies of ESG and corporate financial performance found that “the large majority of studies report positive findings”. This is likely the largest empirical study on the matter, and presents a solid business case for ESG biased investing.
Another study, by Morgan Stanley found that “investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments. This is on both an absolute and a risk-adjusted basis, across asset classes and over time.”
Does Collins House Online charge more for Socially Responsible portfolios?
No, we charge the same low fee regardless of whether you choose to add the Socially Responsible Investment option or not.
However, the inbuilt fees charged by the firms that manage the ETFs for Socially Responsible Investment are slightly higher. This is because there is significantly more work involved in managing the screening process, for example investigating and evaluating the companies. Core Collins House Online portfolios have an average ETF fee ranging between 0.17% – 0.20% per year, whereas our Socially Responsible Investment option portfolios have an average ETF fee ranging between 0.23% – 0.40% per year.
Will Collins House Online’s Socially Responsible Investment options change over time?
We anticipate that in the next few years the number of Socially Responsible Investment ETFs listed in Australia will expand greatly. We constantly monitor and review all available ETF options, and should our Investment Committee decide a better investment option is available, we will inform our members and make the switch.
Which Socially Responsible Investments does Collins House Online use?
For Australian shares, we’ve chosen the Russell Australian Responsible Investment ETF which screens out companies heavily involved in alcohol, tobacco, gambling, pornography, controversial weapons (like cluster bombs), and high-polluting fossil fuels. It also gives a positive weighting to companies that display positive environmental, social and governance practices (such as diversity and management). The entity managing this ETF, Russell Investments, has been a signatory to the United Nations’ Principles for Responsible Investment (UNPRI) since 2009.
For International shares, we’ve chosen the UBS IQ MSCI World Ethical ETF, which screens out companies with significant involvement in tobacco, production of cluster bombs, landmines, chemical and biological weapons and depleted uranium weapons.
Collins House Online Investment Services Pty Ltd (Collins House Online) is a Corporate Authorised Representative of Collins House Private Wealth Pty Ltd AFSL 449146.