The FTSE 100 index closed down today as oil companies were hit after the Organisation of Petroleum Exporting Countries failed to agree to curb production.
Why would this be important to you as an investor – or for the impact on your pension fund?
Unless you manage your investments or pensions , or have an adviser help you, it is likely that stocks in the FTSE 100 would feature strongly.
The “Footsie” is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by UK company law. The index is maintained by the FTSE Group, a subsidiary of the London Stock Exchange Group.
And so, the Footsie is normally quoted by the media when commenting upon the state of business – that means a rising Footsie makes everyone feel good and when it falls everyone worries.
But this doesn’t mean that this group of Companies will give the best investment growth for you. And, if you have concerns about ethical investing or sustainable businesses, a number of the FTSE 100 companies may not be very acceptable to you.
This week it was reported that Opec failed to agree on curbing production despite a global supply glut and the strength of the dollar, which is leading to the collapse of oil prices, with the resulting uncertainty hitting stock markets.
The FTSE 100 closed 0.24 per cent down at 6,223 points, led lower by Royal Dutch Shell, BG Group and BP.
“A stronger dollar and the aftershock of Friday’s Opec meeting are weighing on the oil market,” Tamas Varga, oil analyst at PVM Oil Associates, said.
Also it was reported that Tesco fell by 3.44 per cent to 157p per share on the same day that veteran Jill Easterbrook announced she would be leaving the company.
But what if your fund selection did not include these companies would your investment be doing a lot better?
Well, of course it isn’t that simple nor clear cut but history has shown that investment in ethical and socially responsible companies most often out performs the main indicies.
So let’s start then by sidestepping news about the Footsie and looking more at where the best investment opportunities lie that also meet your personal criteria.
Research from Moneyfacts Investment Life & Pensions found that overall, ethical or “sustainable and responsible investment” (SRI) funds beat returns generated by traditional funds in 14 out of 20 different investment scenarios surveyed, with the average ethical fund returning 7.8% compared with 6.5% from the average non-ethical fund in the past 12 months. SEE HERE
Ensure that you have an Independent Financial Adviser whose expertise is in this area and who doesn’t just follow run of the mill investment processes.
And the best advisers will be with you year after year advising when investment returns are hard to get and not just seeking praise when it all goes right.
Don’t just follow the crowd . . .there are often better paths to tread!! It’s your decision.
Also read: Could The FTSE 100 Drag The Markets Lower?