Natasha Prayag
By Natasha Prayag

No time like the pres-Lent to detox a portfolio

Have you said cheerio to chocolate, adios to alcohol or sayonara to sugar? These are generally the most popular items people choose to give up for the 40 days and 40 nights of Lent.

As good as it is to turn away from those guilty pleasures for the next month or so, it is also a great time to cleanse your investment portfolio and ditch the stocks that haven’t performed as you expected, or search in new areas for potential bargains.

Taking the traditional approach to Lent, why not ditch the producers of unhealthy items from your portfolio and replace them with something that is environmentally friendly, a producer of healthy food or drinks – a ‘green’ stock?

The tobacco industry, for example, has traditionally been very lucrative for investors and is often found at the heart of a well-diversified investment portfolio. The MSCI World Tobacco Index, however, has been underperforming the MSCI World index for a while – years, in fact.

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Greener, or more environmentally-friendly and health conscious, companies, however have been steadily rising – both in popularity among younger investors and share price gains.

Renewable stocks are certainly gaining ground and are a great place to start in cleansing any portfolio. NextEra Energy, the world’s largest solar and wind producer, has risen 11% year to date.

Organic food producers are also gaining popularity among the hip investor crowd and sales of food that have not been involved in any form of genetic modification have been on the up year after year, by as much as 14%. US-based food producer General Mills, known for its healthy cereals, baking goods and snacks, is up 22% year to date.

Perhaps the largest area of potential, however, lies in climate change. At the end of last year, the United Nations revealed that the earth is warming up at a rate more alarming than initially expected, and is likely to hit dangerous levels by 2040.

According to US SIF (The Forum for Sustainable and Responsible Investment), a membership organisation of sustainable investors, sustainable and responsible investments have surged to more than $11 trillion in the past 25 years or so.

Some of the possible investments here are well known – Walmart has reportedly already made 5,000 of its stores more environmentally responsible, and Toyota has committed large amounts of its sales proceeds to research and development of hybrid technology.

Ultimately, whether you choose to give up the bad and replace the good, or ditch those underperformers for something more opportunistic, the spring is a perfect time to consider investments outside of your traditional box.

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