Ethically screened investments are not enough – a ‘values-driven’ approach to investing, which uses money to achieve social outcomes, is required. That’s the rationale behind MAD (Make a Difference) Investing, launched last week in the UK. MAD describes itself as a ‘community of investors’ (‘we don’t just have clients − we have members, all of whom want to use their money for the greater good,’ says its website) whose main objectives are to provide information and tools for ethical investors and to attract new social impact investors wanting to take positive action. MAD aims to mainstream this blended approach by bringing investors together with available products, and what founder Anna Sofat describes as ‘fine-tuning’ them (the products, not the investors) to better serve the community. ‘These new models and approaches exist in small numbers and are becoming more sophisticated,’ says Sofat, ‘but they are very hard to understand. MAD Investing’s aim is to provide information and demystify social impact investing.’
To this end, among the tools on its website is a directory of more than 30 high social impact funds, compared and star-rated in terms of risk to capital, potential financial returns and social and environmental impact. John Fleetwood, whose Ethical Money Limited conducted the research on which the directory is based, says that, the popularity of ethical funds notwithstanding, he has become increasingly dissatisfied with them. ‘Yes, ethical funds have grown in number and popularity,’ he says, ‘but (with notable exceptions) they have failed to inspire me, since a quick glance at the top 10 holdings revealed them to be not that very different from the conventional portfolios that they replaced in my panel of recommended investments.’ He therefore wanted to develop an investment service ‘where the values of the client are truly reflected in their investments’.