Edit: In July 2023, GOODFOLIO announced it was closing its investment platform and all existing accounts.
Here we look at GOODFOLIO – a new DIY investment platform that aims to make it more straightforward to build and manage custom portfolios that align with your values.
The deal
Newly-launched investment platform GOODFOLIO aims to give you the knowledge and tools you need to build and manage custom portfolios that align with your ethical values.
GOODFOLIO offers an ever-growing range of Exchange Traded Funds (ETFs) that have been screened and categorised into themes such as Climate Solutions, Gender Equality, Water and Bio Revolution. It provides detailed information on each fund including past financial performance, a full breakdown of holdings (all the companies the fund invests in), and alignment to the United Nations’ Sustainable Development Goals (UN SDGs).
You can search for and compare these ETFs side-by-side, or use the ‘portfolio creation’ tool, to put together a custom portfolio. Once you have created your portfolio and credited your account, you can track both the financial performance and impact of your investments through your personal dashboard on the platform.
Your investments can currently be held in a tax efficient* ISA (Individual Savings Account), or GIA (General Investment Account). There are plans to introduce a SIPP (Self Invested Personal Pension) and JISA (Junior ISA) in the future.
User-friendliness
GOODFOLIO is aimed at people with at least a little bit of investment knowledge, rather than absolute beginners. This is because you will need to understand and compare the performance and impact data provided on the platform and choose your own funds. You should also know what an ETF is and how it compares to other forms of investing for positive impact (more on this below).
The platform is designed to be desktop-based, given the amount of fund information displayed, so there is currently no app to download.
We like how GOODFOLIO makes it easy to compare ETFs side-by-side and how transparent it is with the data it provides on each one. You might need a little investing experience to digest this, but it means you can make informed decisions about where you invest your money.
Is it safe?
GOODFOLIO is an appointed representative of RiskSave, which is regulated by the Financial Conduct Authority (FCA). Your money is held by a regulated custodian so if GOODFOLIO was to go bust, you would be protected up to £85,000 by the Financial Services Compensation Scheme. It is important to remember that, as with any investments, the value of your portfolio can go down as well as up.
Sustainable option
GOODFOLIO only offers funds that match sustainability themes such as Climate Solutions, Gender Equality, Water and Bio Revolution (health and healthcare innovation). For each of these funds you can see the full holdings so you know exactly what you’re investing in, environmental footprints, alignment with the UN SDGs, and – importantly – asset managers’ voting records for environmental and social issues in underlying companies.
You can find out more about how GOODFOLIO screens its funds here.
The company has chosen to include only ETFs as a starting point, as the cost of these funds is generally much lower than actively-managed funds. However, it is important to note that ETFs are ‘passive’ investments, which means the money goes into a basket of companies and essentially, the asset manager simply sits back and keeps watch. They are therefore not generally as impactful compared to funds with managers that actively stock pick the right companies.
Unique selling points
- Transparency. GOODFOLIO gives in-depth information on each fund so you can make educated decisions on where to invest your money.
- Gives you control over your investments. The platform gives you the knowledge and tools you need to build your own investment portfolio in line with your personal values.
- Financial AND impact data. You can choose and manage your investments based on both financial and impact data. The latter includes the environmental footprint of each fund – such as CO2 and water used – as well as how it matches up to the UN SDGs.
The plus points
- Fills a gap for investors with some experience. GOODFOLIO lets investors take control over their portfolio by choosing their own funds based on financial and sustainability criteria.
- Low minimum investment. Start investing from £25 (lump sum).
- Easy comparison. You can look at and compare the returns and impact of ETFs side-by-side, helping you to make informed investment choices.
Any drawbacks?
- Web-based only. There is currently no app, although there are plans for one in the future.
- Only ISAs and GIAs offered. GOODFOLIO currently has two accounts options but is looking to introduce a JISA and SIPP in the future.
- Passive investments. ETFs are low cost but generally less impactful than active investments. GOODFOLIO says it plans to add actively-managed funds to its offering.
Overall sustainability credentials
The ETFs held by GOODFOLIO vary in terms of their sustainability ratings with Morningstar – this is a globally- recognised score for how well funds measure up to environmental, social and governance (ESG) standards. For example, the Lyxor Global Gender Equality (DR) Ucits ETF is rated four out of five while the IShares Ageing Population UCITS ETF is rated just two out of five (this one has holdings such as Hilton Vacations and Expedia).
However, while very useful, the Morningstar rankings aren’t the whole picture. We like the way GOODFOLIO displays how well the underlying companies in each ETF match up to the UN SDGs (as well as this can be done – it isn’t a perfect science).
There is, unfortunately, no sacrosanct way of assessing sustainability, but measuring against UN SDGs and also voting history as GOODFOLIO has done makes a lot of sense, even if other ratings don’t always agree.
While it might not go quite far enough for the most motivated of positive impact investors, the platform is encouraging money to go in the right direction (at a low cost) and away from the most destructive industries and practices.
While other investing apps have narrowed down sustainable options in the name of simplicity, GOODFOLIO provides lots of choice and transparency, which puts control in the investors’ hands.
Cost of use
GOODFOLIO charges an annual management fee of 0.3 per cent for the first £12,000 invested, and 0.25 per cent for anything above. Your first £1,000 of investments are free of charge. You will also pay a fee to the fund managers, which varies from 0.1 per cent to 0.65 per cent depending on the funds you choose.
Minimum investment is £25.
How do these costs compare to competitors?
GOODFOLIO’s fees are competitive, especially with no fees for the first £1,000 invested.
Its fund manager fees are low in general compared to other funds (excluding the IShares Global Clean Energy UCITS ETF at 0.65 per cent, which is pretty high). The platform lists them cheapest to most expensive which is useful as cost is important with ETFs.
CIRCA5000, which enables you to invest in low-cost ETFs that tackle climate change, charges a 0.5 per cent annual management fee (zero percent for pensions until April 2023. Its funds manager fees range from 0.25 to 0.65 per cent.
The Big Exchange, co-founded by The Big Issue, has actively-managed funds with an annual management fee of 0.25. There is also a fund management fee, which typically ranges between 0.8 per cent and 1.8 per cent, per year.
Other options
Risk warning: remember that when you invest, your capital is at risk.
*Tax efficiency is dependent on individual circumstances and tax rules are subject to change. If you are uncertain, please seek independent tax advice.
This article is in partnership with GOODFOLIO.
