Choosing a CTF - ethical or high-performing?

[phdlife]

In a twist on the "public or private schools" debate - I have a strong greenie streak; Family Investments CTF is performing reasonably well; I'm tempted to go with them.

OTOH, DH and I are not in a good financial position for ourselves, let alone ds, and I am anxious to leave him better set up than we were. (We are both around 40, have never owned property, and for long, boring reasons, extremely little in the way of pension, etc).

It is extremely doubtful whether we'll be able to put much of our own towards the CTF and if we do it'll be hit hard by exchange rates. So an unethical, high-performing fund is tempting indeed...

WWYD?

My theory is that the green funds will do better in the long run because they are into sustainable business, which I reckon must be good financially as well as ethically. Family Investments offer both an ethical and a normal fund.

I agree with MadamePlatypus. I work in banking and my personal view is that over the next 10-20 years, green stocks will be the new dotcom boom.

Many of what you (rightly) regard as "unethical" businesses are also vulnerable to staggeringly big lawsuits and changes in legislation. For example, if the EU were to pass a law banning crude palm oil or taxing it at a punitive rate, the Malaysian and Indonesian plantation companies would all be screwed overnight.

The other thing to consider is not what China exports (dictated by Western demands, i.e. 40 zillion plastic Power Rangers a year) but what it imports itself. They know that social stability is only possible in a healthy environment, so to hang onto power the government is madly looking at things like renewable energy. Personally I'd rather have my child's money in geothermal energy or companies that make photovoltaic cells than in ones that are based on consumption of tat.

I forgot to say, high performance correlates with high risk. Just because the high-performance funds have done well over the past two or three years, it doesn't mean that performance is at all sustainable in the future so if you're looking for a 20-year investment horizon, I'd go for ethical. Everything could all go pear-shaped very easily after another Sept 11 or if people actually wake up and realise that a moron has been in charge of the world's biggest economy for the past eight years. Again it's nothing but my personal view, but I can see a lot of economic chickens coming home to roost after the 2008 US elections.