Interest; Rates; Inflation

Investment Update – Interest Rates Rise Again to Combat Inflation

Market performance in July was strong, as a ‘bad news is good news’ dynamic appeared to take hold.

Many investors are reflecting on the year so far, which saw the largest falls for the S&P 500 index over the first six months since 1970. The MSCI All Country World Index (which tracks the largest companies around the world) also suffered falls and its worst opening six months since its creation in 1990.

However, not all industries have performed in the same way. For example, the energy sector held up relatively well due to high crude oil and gas prices. The war in Ukraine also continued to influence markets, due largely to the uncertainty as well as higher commodity prices. In particular, energy and food costs remained elevated owing to supply disruptions.

Markets rally in July but inflation surges again
There were gains during most of the month for markets in the US and Europe, as investors looked to balance their assessment of the risk of a global slowdown with the prospect that central banks may scale back their plans for interest rate rises. The S&P 500 and tech-heavy NASDAQ indices had their best months since 2020.

A stronger-than-expected US employment report for June eased recession fears slightly, as did stronger consumer spending figures.

However, US inflation figures for June came in higher than expected at 9.1%, putting a further focus on the Federal Reserve (Fed), the US central bank, and what it may decide to do next. The Fed raised interest rates towards the end of the month by 0.75 percentage points, the second such hike in as many months, though this had been widely expected. Data showed the US economy shrank in the period between April and July, and while an economic contraction is not good news, markets rallied on the view that the Fed may be able to slow the pace of its interest rate hikes.

UK economic growth surpasses expectations
There was some positive news in the UK, as figures showed economic growth of 0.5% for the economy in May – exceeding many forecasts – after two consecutive months of contraction. The news followed a Bank of England financial stability report released early in July, stating that global economic conditions have worsened due to rising inflation – which crept up to 9.4% in June. Higher prices are putting pressure on the finances of UK businesses and households, deteriorating the country’s economic outlook. The Bank added that the volatility in global markets in recent months is likely to continue.

The inflation rate in the euro area rose to 8.6% in June, prompting the European Central Bank to raise interest rates for the first time since 2011, taking it from a negative rate of -0.5% to zero. The European Commission also cut its growth expectations and increased its inflation forecast for the region.

Fears of a recession are more intense in the euro area, as investors stay alert to cuts in energy supply from Russia, and EU members have agreed to cut their natural gas use by 15% over the winter. These fears also led to the euro falling to its lowest point against the US dollar in 20 years. Despite these fears, the euro area economy expanded 0.7% in the period between April and June, which led to markets recovering and ending the month in positive territory.

Despite positive market performance during the month for most Western stock markets, many countries are battling high inflation, slowing economic growth and an increasing probability of a global recession, which will continue to dominate financial markets over the next few months. When investment conditions are challenging, it’s even more important to remain focused on your long-term goals. We can expect periods of positive performance as we’ve seen in July, and history shows that when you try to time the markets, you risk missing out on these short bursts of recovery.

Key takeaways

  • US inflation figures for June showed a higher than forecast rise to 9.1%, putting pressure on the US Federal Reserve to raise interest rates.
  • The UK’s economy grew by 0.5% in May, exceeding forecasts.
  • The inflation rate in the euro area rose to 8.6% in June, prompting the European Central Bank to raise interest rates for the first time since 2011.

Could remortgaging help you beat the cost-of-living crisis?

Practically every penny of Mike’s monthly salary is accounted for so, as the cost-of-living crisis starts to bite, he’s worried about making ends meet. He’s started shopping around for cheaper deals on his broadband, mobile-phone contract, and car insurance, and he’s also cancelled his gym membership and a couple of his TV subscriptions. But he’s overlooked the bill offering the largest potential saving – his mortgage.

What is remortgaging?

Remortgaging involves taking out a new mortgage on a property you’ve already bought. You might do this to replace an existing mortgage deal or to borrow money against your home.

Is remortgaging right for Mike?

After Mike’s last mortgage came to an end, he didn’t look for a new deal so he was switched onto his lender’s standard variable rate (SVR). An SVR is usually much higher than fixed and tracker rates, and it can go up at any time. Research by Habito found 27% of mortgage holders in the UK are currently on their lender’s SVR, and they worked out – on an average mortgage – this translates to an extra £340 a month. This means Mike could almost certainly benefit from remortgaging.

Other reasons to remortgage

Even if you’re not on your lender’s SVR, there are a variety of reasons you might want to remortgage:

  • To beat interest rate hikes. As inflation goes up, interest rates are starting to follow suit, so it may make sense to lock into a low rate now.
  • You’re coming to the end of a deal. Mortgage advisers generally agree you should start looking for a new deal around three to six months before your current rate ends. However, the research by Habito found 46% of mortgage holders are unaware of this.
  • The value of your home has gone up. A significant rise in the value of your home may have moved you into a lower loan-to-value band, meaning remortgaging may give you access to reduced rates.
  • You want to borrow against your home. Remortgaging may allow you to raise money cheaply on low rates. Before doing this, it’s worth getting financial advice to make sure this really is the cheapest way for you to borrow.
  • You want to overpay, and you can’t on your current deal. If you’ve come into some money recently, remortgaging will allow you to reduce the size of your loan and possibly get a better rate. You’ll need to take into account any exit fees or early repayment charges to weigh up whether remortgaging makes financial sense.

Where to start

It’s not always clear cut whether you’ll benefit from remortgaging. A qualified mortgage adviser will look at your circumstances and find out exactly what you want to achieve by remortgaging. For example, are you simply looking to reduce your monthly payments or do you want a more flexible mortgage that allows payment holidays? The adviser will then set out the best options available. Regular mortgage reviews can help ensure you’re never overpaying unnecessarily.

If you’d like to speak to someone about your mortgage, we’re here to help.


Talking About Money

While, for many, discussions about money can be extremely uncomfortable, experts have long stressed the best approach to financial issues is invariably to talk about them. Indeed, perceived wisdom suggests the more open and honest people are about money, the better their life and relationships tend to be.

Finance: the last taboo

There’s a wide variety of reasons why people don’t like to discuss their finances. In some cases, money is simply viewed as a vulgar subject to talk about, while many individuals lack financial confidence and therefore feel foolish discussing their finances; for others it’s easy to just ignore the issue altogether or simply leave it to someone else to sort out. As a result, many of us don’t like to talk about money, which means finance stands out as one of the last taboo topics in our society.

Importance of financial conversations

A failure to communicate about money though can lead to serious problems especially for other family members. This particularly relates to the younger generation and the importance of nurturing a sense of financial responsibility that will ensure they are ready to take control of their finances. It’s also critical in relation to older people as, if discussions have not taken place, there is no way of knowing their wishes when important issues relating to their financial future inevitably emerge.

Elephants in the room

While it is therefore vital to talk, discussing some financial topics can prove extremely challenging for many people. For example, parents often find it difficult to discuss issues surrounding inheritance and the transfer of wealth. This means conversations with their children on this topic can be awkward or stilted. It is imperative, however, that parents do include their offspring when making financial planning decisions in order to ensure they are ready to assume responsibility for family assets when the time arises.

Finance paralysis

An inability to talk about money can also lead to personal finance paralysis. Which is basically the fear of making a bad decision. This can result in people either delaying important financial decisions or not making any decisions at all. Talking issues through with a trusted confidante though is a particularly good way to help alleviate such anxieties. As it equips people with both the knowledge and conviction to make appropriate decisions.

Talk to us

As with most things in life, it’s usually easier to figure out financial problems if you talk them through with someone you trust. Discussing issues with those people that matter to you can help get things into perspective and thereby aid the decision-making process. And remember, we’re always here to help too. So feel free to get in touch and start a financial conversation with us.

Key Takeaways:

  • Experts have long stressed the best approach to financial issues is to talk about them
  • A failure to communicate about money can lead to serious problems
  • This particularly relates to the younger generation and the importance of nurturing a sense of financial responsibility
  • Parents often find it difficult to discuss issues surrounding inheritance and the transfer of wealth
  • It is imperative that parents include their offspring when making financial planning decisions
  • This will ensure they are ready to assume responsibility for family assets when the time arises
  • An inability to talk about money can lead to personal finance paralysis, a fear of making bad decisions
  • This can result in people delaying important financial decisions or not making any decisions at all
  • As with most things in life, it’s usually easier to figure out financial problems if you talk them through

Investment Update – A Volatile Period For Markets

High inflation, disappointing earnings results from some tech companies and Russia’s invasion in Ukraine caused turbulence for the financial markets.

The reality of armed conflict between Russia and Ukraine pushed down leading stock market indices during February. Since the start of the year, conditions have been volatile. This was owing to concerns about persistently high inflation and central bank interest rate rises. Geopolitical tensions added further uncertainty, with rapidly changing events causing markets to slide around the world.

Oil prices surged as investors weighed up the risk of Russia’s military intervention to the flow of energy supplies. Brent crude passed $100 a barrel for the first time since 2014. Many oil firms were also assessing what effect sanctions will have on their considerable assets in Russia. The price of natural gas soared in an already tight market.

Nations around the world condemned Russia’s actions and implemented sanctions. As well as excluding Russian banks from Swift, the international payments system. The country’s central bank has had access to its foreign reserves frozen. The immediate impact included a collapse in the value of the Russian rouble and long queues outside domestic banks as Russians worried about a shortage of cash.

Inflation and interest rates

One of the greatest risks to the global economy is the likelihood that the conflict will push commodity prices higher. This will continue to put upward pressure on inflation. Even before Russian tanks rolled into Ukraine, western governments were struggling with rising energy prices that threatened to derail economies emerging from two years of the pandemic.

Inflation has soared to a 40-year high of 7.5% in America recently. It’s likely that the Federal Reserve (Fed) will increase interest rates again in March to bring down the pace of price rises. The UK is experiencing the highest level of price rises 30 years. With the Consumer Price Index reaching 5.5% in January and prompting the Bank of England to raise interest rates again, to 0.5%.

Meanwhile, inflation in the euro zone has also risen faster than expected, putting more pressure on the European Central Bank to taper off its pandemic stimulus faster than scheduled. Consumer prices jumped by 5.1% from a year ago, with rising energy costs one of the main causes. The region’s economy grew by 5.2% in 2021, and output is now back at pre-pandemic levels.

The technology sector was another source of concern for investors over the month. The sector has been one of the main beneficiaries of the lockdowns that have punctuated the pandemic over the past couple of years. In particular, businesses that have allowed us to work remotely and kept us entertained from home have performed particularly well. Yet more recently, earnings results and profit forecasts have been mixed as life starts to return to normal.

10 Ways To Reduce Your Tax Bill

Being tax smart means knowing the basics about how tax affects your life and money. Here are 10 ways to reduce your tax bill, which could make your money go further for you and your loved ones.

1. Personal savings allowance

You’re entitled to receive some interest on your savings tax-free every year, depending on your income tax band. For non-taxpayers or basic rate taxpayers you’re allowed up to £1,000 per year; for higher rate taxpayers you get £500. If you have savings with a spouse or partner, you can each use your allowances against your joint savings.

2. Marriage allowance

If you are married, you might be able to take advantage of the marriage tax allowance. It allows one half of a couple who earns less than the income tax threshold (£12,570) to transfer up to £1,260 to their higher-earning spouse (who must be a basic rate taxpayer).

3. ISA allowances

An ISA account allows you to save or invest up to £20,000 tax free annually. Whether it’s in a cash ISA or stocks and shares ISA – which also comes with the benefit of being exempt from dividend tax and capital gains tax on all growth.

4. Dividend allowance

You are allowed to receive up to £2,000 a year in dividends, tax-free. This allowance can be particularly useful if you own shares or you’re a company owner or director.

5. Capital gains allowances

Profits (or ‘gains’) you make on the sale or disposal of an asset (like a property where it’s not the main home, investments and shares not in an ISA or even personal possessions worth more than £6,000 (apart from your car) are exempt from tax up to the annual allowance of £12,300. For married couples or those in civil partnerships who own joint assets, the allowance is doubled – to £24,600.

6. Pension allowance

Your pension allowance annually is £40,000, although it can be lower for higher earners and where pension savings have been flexibly accessed. Any contributions you (or your employer) make receive tax relief from the government (based on your income tax band) of 20% or more – and the money in your pension pot will grow tax free.

7. Pension carry forward

If you don’t use up your annual pension allowance, you can ‘carry forward’ the previous three years’ worth of unused allowances providing you are still registered with the pension and have earned in the current tax year the amount you (or your employer) would like to contribute.

8. Charitable donations

You can donate to charity tax free and claim back the tax on your donation through gift aid. If you are a higher or additional income taxpayer, you can also claim back the difference to the basic rate on your gift aid donations. Just remember to keep hold of all records of your donations to claim tax relief when the time comes to submit your tax return.

9. Gift giving exemptions

Gifting comes with the benefit of being exempt from inheritance tax, for an annual gift amount of £3,000. Other tax-exempt gifts include money towards a wedding or grandchild’s education. No inheritance tax is due if you live for seven years after making the gift to someone who is not your spouse. For example, gifting your children a property.

10. Knowing your tax code

This one is important because your tax code tells HMRC how much of your salary they will collect. It’s a good idea to check your tax code each time you change jobs or at the start of the tax year. Being on the wrong code could mean you’ve overpaid tax and are due a refund.

These are just some of the ways you can ensure you’re making the most of your money and not paying more tax than is necessary. Speak to your adviser to learn more about your money, estate, and taxes. Please not that Openwork advisers are not able to provide specific tax advice.


HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen. For specific tax advice please speak to an accountant or tax specialist.

Junior ISA

In the Autumn Budget in 2021, it was revealed that the Junior ISA spending limits would remain at £9,000 for the 2022/2023 tax year. The JISA limit was last changed in early 2020, when it was doubled from £4,500 to its current level.

JISA and CTFs both benefit

The Junior ISA replaced Child Trust Funds (CTF) in 2011, but those who still hold CTF will continue to benefit from the increased allowance. Both JISA and CTF are a tax efficient way to build up savings for a child. It is not possible to have both a JISA and a CTF.

Savings for children

A junior ISA can be opened for any child under 18 living in the UK and the money can be held in cash and/or invested in stocks and shares. Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it. The child can manage the account from age 16 and at age 18 they can withdraw the money if they want, when the account otherwise becomes a normal cash or stocks and shares Individual Savings Account (ISA). Alternatively, they can keep saving into it as a standard ISA.

The tax benefits for JISAs and CTFs are the same as for an adult ISA. So, there is no Capital Gains Tax and no tax on income.

Investing for their future

Following the Budget, it was reported: ‘By saving towards their future, families can give children a significant financial asset when they reach adulthood – helping them into further education, training, or work.

Junior ISAs and Child Trust Funds are tax-advantaged accounts for children, designed to encourage a long-term savings habit.’

Two principles which apply to many aspects of financial planning are particularly relevant when planning for your child’s financial future:

  • The longer the timescale, the more scope there is for your investments to grow
  • Taking expert advice can help you avoid potential pitfalls

The potential of a JISA

It is estimated that if £9,000 was invested every year from birth and assuming a 2% annual return, which is obviously by no means guaranteed, the JISA would be worth around £194,000 at age 18. Saving such a large amount is obviously out of the question for most people, but whatever amount you can afford to save for your child’s future, a JISA is an ideal choice.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Key takeaways:

  • The JISA allowance will remain at £9,000 for the 2022/2023 tax year.
  • Junior ISAs are long-term, tax-free savings accounts for children.
  • JISAs replaced Child Trust Funds (CTFs) in 2011.
  • Both benefit from the increased allowance of £9,000 per tax year.
  • JISAs can be opened for any child under 18 living in the UK.
  • Once the person who has parental responsibility for a child has opened the account, anyone can contribute to it.
  • The child can manage the account from age 16 and at age 18 they can withdraw the money.
  • There is no Capital Gains Tax and no tax on income.
  • The ISA allowance will remain at £20,000 for 2022-2023.

Reckless Caution Is Costing Savers

New research from The Openwork Partnership, one of the UK’s largest and longest established financial advice and investment networks, shows more than 11.6 million are keeping all their money in cash savings despite ongoing low rates.

Its nationwide study found 22% of adults prefer to keep all their money in cash while the same number will not consider stock market investments despite potentially higher returns as they don’t understand it.

The Openwork Partnership is warning about the risks to savers of reckless caution – the cost of missing out on higher returns on their money because they stick to cash accounts. Despite the recent Bank of England base rate rise, rates on cash accounts remain below inflation while the FTSE-100 gained 14.3% last year – its best performance for five years.

Excess savings in the UK – the extra amount people have saved because of restrictions during the COVID-19 pandemic – is estimated to be around £163 billion compared with £112 billion a year ago.

Just 15% of those questioned said they had a healthy balance between savings and investments while 14% said they were willing to miss out on higher returns by avoiding stock market investment.

One potential reason for avoiding the stock market highlighted by the research was lack of knowledge – around 11% said they did not know where to go for advice. However, nearly one in 10 (9%) said they had benefited from financial advice in terms of higher returns on their cash.

Claire Limon, Network Director at The Openwork Partnership, said:

“It is good news that people have built up savings and the money will be very valuable given the looming rises in the cost of living.

“But there is a real risk of reckless caution costing people substantial amounts from ignoring stock market investment in favour of keeping money in cash when rates remain at very low levels – meaning savers are losing money after inflation is taken into account.

“It is understandable that people are worried about the risks of losing money on the stock market but advice from a professional adviser can help ensure their money works hard for them and any investments are tailored to their appetite for risk.”

The table below shows the picture across the country with people in Wales most worried about investing in the stock market and most likely to want to keep all their money in cash.

Wales 37% 32%
London 30% 21%
South West 29% 21%
Northern Ireland 28% 17%
West Midlands 26% 16%
East of England 26% 18%
Scotland 25% 22%
North West 25% 27%
South East 25% 21%
Yorkshire & The Humber 22% 21%
North East 21% 23%
East Midlands 20% 29%
UK 26% 22%

The Perks of Protection

As well as peace of mind, many insurance and protection providers offer additional benefits that you may not know about.

Whether we’re crossing the road or getting on a plane, we encounter risks every day. For most of us, things have been more uncertain than ever past two years as we continue to deal with the coronavirus pandemic. Although we can’t always control what’s happening in our lives, we can plan for the unexpected.

By taking out a protection policy, you can safeguard your family’s finances if your situation changes. The main types of protection include:

  • Life cover – pays out a lump sum if you die
  • Health insurance – pays medical costs at a private hospital or private ward
  • Critical illness – pays a tax-free lump sum if you’re diagnosed with a major illness
  • Home contents and buildings – covers your home’s structure (including fixtures and fittings) and contents (furniture)
  • Income – pays out if you can’t work due to illness or injury

As well as peace of mind, protection policies often come with added extras. We’ve highlighted examples of some of the perks you could receive when you take out a policy, even if you don’t make a claim.

Welcome gifts

When you sign up for a protection policy, some providers offer a welcome gift. For example, health insurers sometimes offer gadgets like an Apple Watch to help you track your activity – with some even offering a discount based on the amount of exercise you do each month.


Many health insurers offer discounts on gym memberships and weight-loss programmes to help you embrace a healthier lifestyle. Some also offer you the option of taking a health check to reduce the amount you pay each month.

It’s worth noting that when you take out a protection policy, your provider is likely to offer you discounts on other products such as pet or travel insurance.

Additional healthcare options

Some health insurers now cover complementary therapies such as osteopathy and acupuncture, giving you more treatment choices. In addition, counselling services are now included in most health insurance policies and many also give you the option to upgrade your hospital room if you need treatment.

Will writing

Some providers of life insurance give new policy holders the opportunity to draw up a will free of charge.

Cover for children

Many critical illness plans include free cover for dependent children.

What support do insurers offer after the event?

Illness and bereavement help. Many providers give free access to services offering practical and emotional support for those left behind after the death of the policyholder.


Insurers usually offer back-to-work support services, including physiotherapy, careers guidance or advice if you choose to go self- employed. If you’re returning to work following a mental health issue, providers will continue to cover counselling sessions for a set period of time.

Investment Update – Shaken but not stirred

Persistently high inflation is putting pressure on central banks to raise interest rates. Which unsettled markets during the first few weeks of the year.

At the start of 2020 the World Bank issued a warning that the global economy faces a variety of challenges, including new Covid variants, high inflation and an uncertain geopolitical landscape. Its economists lowered their growth forecasts. And suggested that some richer countries might not reach pre-pandemic levels of output until 2023, with poorer ones taking longer.

Central bank monetary policies are another uncertain factor. After the US Federal Reserve (Fed) said it could raise interest rates multiple times this year and sooner than expected – to curb inflation – stock markets dropped in early January. The Fed is worried that inflation could spiral out of control, and a strong labour market has added to these pressures.

Stocks in the technology sector were among the hardest hit. The Nasdaq Index had its worst start to a new year since 2008 and European technology shares fell too. By the middle of January conditions had stabilised, with investors reassured by the Fed’s announcement that it would tackle the surge in inflation. However, tech share prices suffered again towards the end of the month.

Inflation soars

The annual rate of inflation in the US jumped to 7%, which is its highest level since June 1982. Several factors are sustaining rising prices, with energy costs the largest contributor. In the UK, figures released in January showed inflation at a 30-year high. This was increasing pressure on the Bank of England to raise rates. The euro area’s annual inflation rate crept up to 5%, another record high for the currency bloc. Energy prices were again the main factor.

Yet the underlying investment environment remains buoyant with the global economy continuing to expand at a decent pace, and companies delivering decent profits growth. Notably, the UK’s economy has already recovered to its pre-pandemic level following a strong period of growth in the last few months of 2021, due in part to early Christmas shopping and an increase in dining out.

China’s economy has been suffering from a variety of pressures. Including a heavily indebted property sector, and it slowed at the end of 2021, which prompted a cut to one of its key interest rates. However, full-year growth was 8.1%, exceeding the government’s target of 6% and rebounding from the 2.2% growth registered in 2020. With much of the world dependent on Chinese exports, the country posted a record trade surplus of $676 billion in 2021 – the highest since 1950.

The triumph of tech

With so many aspects of our lives shifting online during the lockdowns and ongoing digitalisation trends, it’s not surprising that the technology sector often dominates the headlines. Notably, Apple became the first company to reach a market value of $3 trillion. The company’s share price has more than tripled since the depths of the pandemic in March 2020.

Meanwhile, Microsoft announced a massive $69 billion deal to buy the games publisher Activision Blizzard. The move shook the gaming industry. And after news of the acquisition, rival Sony saw $20 billion drop in its market value. The deal promises to turn Microsoft into one of the world’s biggest interactive entertainment players.

Key takeaways

  • Figures released in January showed levels of inflation in the UK and US that have not been seen in decades.
  • The UK’s economy recovered to its pre-pandemic level following a strong period of growth over the Past few months.
  • Apple became the first company to reach a $3 trillion market value. And Microsoft announced a $69 billion deal to buy games publisher Activision Blizzard

Ethical Investing – The Power To Change The World

Ethical and sustainable investing are both popular and it’s useful to understand the difference between the two approaches.

Investing in a responsible way is nothing new. It dates as far back as the 1700s, when religious groups such as the Quakers refused to support companies involved with the slave trade or other activities that conflicted with their values. Ethical funds started to appear in the UK in the late 1960s and early 1970s, which allowed people to invest in a way that reflected their personal values.

Ethical investing usually involves using your principles to filter out certain types of securities. For example, some ethical investors avoid sin stocks, which are companies that are involved or primarily deal with traditionally unethical or immoral activities, such as gambling, alcohol or firearms.

Businesses involved with the tobacco, mining and oil industries are other typical ones to avoid.

A sustainable approach

Investing sustainably is different to ethical investing because it involves considering a wider range of issues – from how companies are managed to the impact they have on the environment and the roles they play in society. Investors are embracing this approach because there’s mounting evidence to suggest these issues affect how companies perform over the long term too.

According to calculations made by the sustainable finance team at Danish bank Nordea, moving your pension savings to sustainable investment funds can be 27 times more efficient than four popular ways of reducing your carbon footprint that involve making lifestyle changes – taking shorter showers, flying less, travelling by train instead of by car, and eating less meat.

It makes good financial sense

Investing in well-managed companies that have a positive impact on society and the environment makes good financial sense. For example, if a company suffers reputational damage because it’s been involved in an oil spill, discovered to be treating its workers poorly or accused of corruption, its share price will probably suffer.

Meanwhile, companies that use energy efficiently, invest in training their employees and pay their executives reasonable bonuses are likely to outperform their competitors and return more value to shareholders. Over the long term, they are also better prepared to meet future strategic challenges and take advantage of new business opportunities.

Incorporating an ESG framework

One of the difficulties with sustainable investing is that there’s no standard definition of what it means. However, environmental, social and governance (ESG) factors provide a useful set of standards to assess potential investments:

  • Environmental criteria look at how a company performs as a guardian for the environment, their impact on climate change or carbon emissions, water use or conservation efforts.
  • Social criteria focus on a company’s ability to manage relationships with its employees, clients, suppliers and the local communities in which it operates.
  • Governance examines a company’s leadership, shareholder rights, audits and internal controls, anti-corruption policies, board diversity, executive pay and human rights efforts, for example.

We believe that by incorporating these measures into our processes for selecting the fund managers we use to build portfolios, we can manage risk more effectively and improve returns. In addition, we expect all our investment managers to integrate analysis of ESG risk and rewards into their own investment processes too. We only engage with those that are signatories to the United Nations Principles of Responsible Investing, the gold standard in the wealth management industry when it comes to incorporating ESG issues into investment practice. The Covid-19 pandemic has had such a substantial impact on societies and economies around the world, and the relevance of integrating a responsible investment approach is greater now than ever before.

If you want to know more about sustainable or ethical investing visit Omnis or get in touch.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Key takeaways

  • Ethical investing usually involves avoiding companies that are engaged in activities that go against your principles, such as gambling, alcohol or firearms.
  • Investing sustainably involves considering a wider range of issues – from how companies are managed to the impact they have on the environment and the roles they play in society.
  • We incorporate ESG factors into our investment processes, and expect all our investment managers to integrate them too, as well as being signatories to the United Nations Principles of Responsible Investing.