Ethical funds struggling against so called 'sin-stocks'

Sin Stocks

It appears that investors who are sticking to their moral guns and shunning sin-stocks in favour of ethical investments may unfortunately be in danger of losing out, money wise.

New reports have emerged that show ethical investments to be under performing compared to their unethical counterparts.

Figures over the last five years have shown that the FTSE4GOOD index, the index that dismisses companies connected with arms, tobaccos and other traditionally frowned upon activities, has fared badly when compared with the no sanction FTSE 100 index.

Over the last five years the FTSE4GOOD index has fallen by around 3 percent, while the FTSE 100 has given returns of over 22 percent.

Ethical funds have become more and more popular as people are evidently becoming more aware of environmental dangers, worldwide conflict and human health concerns. The world's first ethical fund was created over 20 years ago by Friends Provident. Back then ethical funds were mocked by hardline city boys and dubbed the “Brazil fund” ie- if you invest in it you're clearly nuts. However, since then ethical funds have grown in popularity as people become more ethically aware, and ethical funds have indeed enjoyed periods of good performance.

It's worth noting that unethical funds may always have an advantage over ethical funds. While some funds may falter in times of economic discontent, smokers, drinkers and gamblers (some of the main unethical funds) will probably continue to indulge in their vices, keeping performances on the stock market up.