Compare Ethical Junior ISA
Find the best ethical junior ISA to make the most of this year’s tax free allowance.
Investment ISAs put your capital at risk & you may get back less than you originally invested
- Invest From: £100
- Investment Options: Nutmeg offer a socially responsible junior investment ISA which places emphasis on environmental and social and governance factors
Why we like it: Open with a lump sum from £100. Simple, transparent – Socially responsible portfolios are tilted towards companies and bond issuers that have high environmental, social and governance (ESG) standards. Nutmeg invest in exchange traded funds that avoid companies engaged in controversial activities while focusing on those that lead their peers on ESG. Capital at risk. Approved by Nutmeg 09/08/2024
- Invest From: £25 pm
- Investment Options: Choose from more than 40,000 UK and global investment options for your child's ISA
Why we like it: ii offer a flat fee service which over time could save you money compared to platform providers who charge on the value of investments held. ii offer ready made funds including their ethical funds which allows you to invest in line with your principles covering environmental, social and governance factors. Capital at Risk
- Invest From: £25 a month or any lump sum
- Investment Options: The core of the investment portfolio consists of shares in companies involved wholly or in part in the manufacture of products, industrial processes or the provision of services associated with improving the environment and the enhancement of human health and safety. Capital at risk.
Why we like it: A consistent performer this popular £1.7bn fund run by triple A Citywire rated fund manager Mike Fox works on a “best ideas” basis with 40 to 50 company holdings . The fund applies both negative and positive screening. Sectors considered more favourably include healthcare and technology, whereas areas such as commodities are generally avoided. There is also a focus on long-term themes and trends such as infrastructure and changing demographics. The fund has reasonable ongoing charges of 0.76% pa for an actively managed fund.
This fund is available through a Junior ISA via: Interactive Investor investment platform »
- Invest From: £100
- Investment Options: Invest in one of a range of expertly designed investment portfolios depending on your investment style
Why we like it: Invest from £100. Simple, transparent – Invest in one of a range of expertly designed investment portfolios depending on your investment style. All five Nutmeg investment styles are built by experts and use exchange traded funds to diversify across stocks, bonds, industries, even countries. Choose the one that works for you. Nutmeg are regulated by the FCA & are covered by the FSCS. To open a Nutmeg JISA, the child must be under the age of 16 and funds cannot be withdrawn until the child turns 18. Capital at risk. Approved by Nutmeg 09/08/2024
- Invest From: £25 pm
- Investment Options: Invest in over 3,000 funds, UK and overseas shares, investment trusts and ETFs
Good to know: With an HL Junior Stocks and Shares ISA, you can choose investments for your child including UK and overseas shares, Investment trusts, bonds and exchange-traded funds (ETFs). HL have over 1 million clients who trust them for their investments. Capital at risk
- Invest From: £25 per month
Why we like it: Responsible investment funds give you the chance to make money in a way that’s in line with your principles. This Fund is designed for investors looking for growth and income from an investment in shares in companies that demonstrate good environmental, social and governance efforts in developed countries. L&G use their scale and influence within the market to propel positive change on environmental, social and governance (ESG) issues.
This fund is available through a junior ISA via: Hargreaves Lansdown investment platform »
- Fund Choice: Invests in companies whose operations are considered to be making a positive contribution to society and seeks to avoid companies which, on balance, are felt to be harming the world, its people or its wildlife. Capital at risk.
- Invest From: £25 pm
Why we like it: This fund works on a “best ideas” basis with 40 to 50 company holdings. The fund applies both negative and positive screening. There is also a focus on long-term themes and trends such as infrastructure and changing demographics. The fund has reasonable ongoing charges of 0.76% pa for an actively managed fund.
What is an Ethical Junior ISA?
An Ethical Junior ISA (JISA) is a tax-efficient savings account for children that invests with an ethical reasonability in mind.
Ethical Junior ISAs are a type of Stocks and Shares JISA, meaning that they invest in the stock market via funds, shares and other investment vehicles.
An Ethical JISA’s underlying investments can either be self-selected or they can be picked for you by a portfolio manager at a higher cost.
This guide will explain everything you need to know about Ethical JISAs. It will also compare the most important features and help you find the best Ethical Stocks and Shares Junior ISA for you.
What are the different types of Ethical Junior ISAs?
The main two types of Ethical JISAs that you can choose between are self-invested JISAs and ready-made Ethical JISAs.
Self-invested Ethical Junior ISAs
Self-invested, or self-select JISAs are facilitated through investment platforms where you pick your own underlying investments to hold in a Junior ISA.
You can choose from a huge range of investments within a self-invested JISA, from funds and shares to ETFs and Bonds. To ensure it is ethical, you need to make sure the companies and funds you purchase are ethical funds – more on this later.
Ready-made Ethical Junior ISAs
A ready-made Ethical JISA portfolio will have the underlying investments chosen by an investment professional. They will make sure your JISA invests in ethical funds and companies and manage and balance the portfolio on a day-to-day basis.
You will usually choose a risk profile or complete a risk questionnaire to determine the best portfolio for you, as most providers categorise their ethical portfolios by exposure to risk.
Because of the expertise and ongoing fund management required to run of a ready-made portfolio, you have to pay more in charges for this kind of Ethical JISA.
What is an Ethical investment?
The definition of an Ethical investment is somewhat down to your own preferences. If you are creating your own portfolio, it could just be shares of a company that operates in a sustainable and environmentally friendly sector, like green energy.
However, managed ethical funds are more specific, tailored investments managed towards a fixed ethical criterion.
Managed funds, such as unit trusts and OEICs, work by pooling investors’ money together and then spreading it across multiple different companies to diversify the portfolio.
An ethical managed fund will tend to avoid certain industries, such as:
- Armaments
- Fur trade
- Pornography
- Alcohol Production
- Tobacco Production
- Gambling
In addition, ethical funds will often define themselves as ESG funds that aim to adhere to certain Environmental, Social and Governance standards:
Environmental Factors:
- Fighting climate change
- Sustainable practices
- Reducing waste and energy usage
Social Factors:
- Fighting for human rights, including race and gender equality
- Protecting their customers
- Treating employees and suppliers fairly
Governance Factors:
- Paying fair and sustainable salaries and bonuses to executives
- Transparent and open financial reporting
- Working ahead of regulatory changes
Why invest in an Ethical Junior Stocks and Shares ISA?
Putting your child’s ethical savings and investments in a JISA wrapper is the most tax-efficient way to save for their future. The two main investment taxes will not apply to their savings:
- Capital Gains Tax (CGT) – the tax on the growth of their underlying ethical investments
- Dividend Tax – the tax on the dividends that most ethical investments pay
As your money invests in the stock market, the potential for long term returns is far greater than those in a Junior Cash ISA.
Although you may experience periods of volatility, over the long term your investments can rise significantly in value. Your child’s savings are generally likely to be held for longer periods compared to other savings accounts, so this compliments stock market investments.
How to pick the best Ethical Junior Stocks and Shares ISA?
In order to find the best Ethical JISA provider for you, there are several key factors to keep in mind:
- Do you want a self-select or ready-made portfolio?
- What are the Annual Management Charges?
- Are there any ad hoc charges such as dealing fees or account closure fees?
- How good are the provider’s customer service ratings?
- What investment risk level do you need? (if choosing a ready-made portfolio)
- What investment research do they offer? (if picking the ethical investments yourself)
How do I open an Ethical Junior Stocks and Shares ISA?
When you have chosen your JISA provider, you need to open the account for your child with a debit card contribution or Direct Debit instruction. You can do this online, over the phone or by post.
When you have contributed your funds, you either purchase your ready-made ethical portfolio or start selecting your own ethical investments to buy within your Stocks and Shares JISA.
Frequently Asked Questions
How do I withdraw from an Ethical Junior ISA?
As the JISA will be in the name of your child, you will not be able to make any withdrawals until they are 18. At this point, the JISA will convert into a standard ISA in your child’s name and they can then make a withdrawal If they wish.
How much can I contribute to an Ethical JISA?
Each child has an annual JISA allowance of £9,000 in the 2024/25 tax year. Make sure that yours and anyone else’s contributions to your child’s JISA do not surpass this annual threshold.
Who can add money to an Ethical Junior ISA?
Anybody can add money to your child’s JISA; however, the accounts must be set up and managed by a parent or legal guardian.
To contribute to someone else’s JISA, you will just need the account reference number and some of the child’s personal information.
Can I transfer an existing JISA into an Ethical JISA?
Yes, you can transfer any existing Cash or Stocks and Shares JISA into a new Ethical Stocks and Shares JISA.
You will need to complete a transfer form with your new JISA provider.
You also need to transfer 100% of any previous JISAs because you can only have one JISA open per child at any time.
You can also transfer a Child Trust Fund (CTF) into an Ethical Junior ISA in the same way.
What happens to an Ethical JISA when my child turns 18?
The JISA will convert into a standard ISA in the child’s sole control.
Can you lose money in an Ethical Junior ISA?
Yes, your underlying ethical investments can go both up and down in value, particularly over short-term periods.