Money: Principles before profit as investors get ethical

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The ethical investment sector is booming, despite being written off as a hippy-type fad just a few years ago.

New figures indicate that growing numbers of people are becoming more choosy about where their money is invested and do not want it supporting activities they oppose such as animal testing or weapons production.

The amount of money invested in ethical unit trusts and investment trusts has more than doubled in the last three years, according to the figures from the Ethical Investment Research Service (EIRIS). In comparison, total funds managed by all UK unit and investment trusts have grown by only 55 per cent.

Ethical investment is defined as choosing investments according to your values and beliefs. Many ethical investors steer clear of companies which, for example, are involved in pesticides, animal testing or nuclear power.

EIRIS says many people with pension plans or endowment mortgages may be indirectly supporting an activity they are opposed to.

The first ethical fund was set up in 1984 and there are now more than 40. Many of them actively seek out environmentally-friendly companies. In June this year the total amount managed by ethical funds was pounds 1.465bn compared with pounds 672m in July 1994.