Letters Investment in tobacco companies

What hope is there for ethical investment?

BMJ 2012; 345 doi: https://doi.org/10.1136/bmj.e8549 (Published 21 December 2012) Cite this as: BMJ 2012;345:e8549

Re: What hope is there for ethical investment?

Sidebotham on ethical investing for doctors [1] misses a key feature of the fund he cites: it is actively managed. [2] Namely, an individual, the fund manager, picks stocks and other assets, deciding when to buy and sell. The transparency of actively managed funds is woefully inadequate in the UK. The fund top ten holdings are listed in the document Sidebotham links to – but without percent weights. Because the holdings are not numbered, it is unclear whether the top ten is in rank order. The top ten is historical: a point-in-time snapshot from the past. Although Sidebotham could discover a tobacco company in the top ten, the remaining holdings are hidden; as is the number of holdings. This is the standard presentation of holdings for actively managed funds.

Meanwhile, low-cost passively managed funds [2] simply track a particular market or sector as represented in an index, e.g. the FTSE 100 Index, for the 100 largest UK stocks by full market value. The FTSE4Good Index Series [3] cover ‘ethical’ companies, and are compiled using published selection criteria. The holdings of passively managed funds are fully transparent: most exchange-traded funds (ETFs), one type of these funds, publish all their holdings, with percent weights, each day.

1. Sidebotham P. What hope is there for ethical investment? BMJ 2012;345:e8549. (21 December.)
2. Which? Active vs passive investment. 2012. www.which.co.uk/money/savings-and-investments/guides/different-types-of-....
3. FTSE. FTSE4Good Index Series. 2012. www.ftse.co.uk/Indices/FTSE4Good_Index_Series.

Competing interests: No competing interests

09 January 2013
Alex C W May
independent researcher
Manchester M13 9DP, UK