Removing emotion from the decision is also necessary, as professional investors would not want sentiment to cloud their view, potentially losing underlying investors a lot of money.
However, the social, environmental and economic benefits of many of the underlying companies are often overlooked in a wash of price to earnings (P/E) ratios, index returns and dividend payouts.
Richard Marwood, manager of the AXA Ethical Distribution fund, says it is important to remember everyone’s definition of "good" varies widely – pointing out that his fund’s screen against animal testing often rules out major pharmaceutical companies that develop drugs to cure diseases.
He says the key is to let investors decide what fund lines up with their own priorities.
With this in mind, FE Trustnet looks at five companies the managers are backing that actually make people’s lives better.
Consort Medical
Gervais Williams (pictured), manager of the CF Miton Multi Cap Income fund, is a fan of Consort Medical, saying it helps asthma sufferers and that there is always demand for its high-quality products.
"They make the valves for puffers that are used by asthma sufferers," he explained"These rounds are sold around the world, but what has been interesting is that in places like China, there are a large amount of people who can benefit from their product because of increasing urbanisation. They had been rolling out less sophisticated, cheaper products for those sorts of markets."
"However, their customers said the things that they want to pay more for are [higher quality] western standard products. That higher quality gives asthma sufferers real confidence and that’s what they want and need. Not only does it help people, but it is a high-quality everyday product."
With a market cap of just £231.68m, the UK-based healthcare company is a constituent of the FTSE Small Cap index and FTSE techMark All Share index.
Over the last decade, the firm has beaten both measures, picking up 22.91 per cent while the FTSE Small Cap gained 133.76 per cent and the FTSE techMARK All Share made 186.98 per cent.
Performance of stock vs indices over 10yrs
Source: FE Analytics
Consort Medical has continued to outperform both indices over three and five years, but has lagged over the last 12 months.
The firm is trading on a price to earnings (P/E) ratio of 17.7 per cent, slightly higher than last year. For such a small company, it also has an attractive dividend yield of 2.5 per cent, which it is expected to maintain at the same level. However this yield is down from 3.3 per cent in 2011.
Latchways
Charlie Thomas, manager of the Jupiter Ecology fund, likes Wilshire-based safety-equipment firm Latchways.
Thomas says the firm already provides high-end safety equipment in a number of sectors, including for climbing wind turbines, working from high roofs and walking on airplane wings.
"This is very important safety equipment," he said. "It has a market cap of just £130m but it’s a world leader in the field in which it operates."
"It’s one that we think over time is just going to grow and grow."
Over the last decade, the tiny company has run far ahead of the FTSE 350 Support Services index, gaining 429.5 per cent. The index picked up just 185.62 per cent over the period.
Performance of stock vs index over 10yrs
Source: FE Analytics
The stock has continued to outperform over three years, and over the extreme short term, although it has lagged the index over one and five years, according to FE Analytics.
It is trading on a P/E ratio of 15.4 and has a yield of 2.3 per cent. This yield is expected to jump to 3.3 per cent in 2014 and 3.6 per cent in 2015, according to The Share Centre.
Cranswick
Another high-growth trend Thomas says he has noticed among consumers is their desire to buy better-quality food, without paying over the odds for it.
While high-end food retailer Whole Foods is one of Thomas’s biggest holdings, he also likes UK-based food processing firm Cranswick, which specialises in pork processing.
"Over the last couple of years, people have been much more focused on the quality of food," he said. "Cranswick is focused on high-end pork processing and they’ve seen really strong demand."
Thomas adds that after the scandal over horse meat in the UK, tracking where food was processed and what exactly is in it has become more important than ever.
"It’s a really well-managed company and they’ve invested a lot into the business," he said.
Cranswick is trading on a P/E ratio of 12.5 and has a yield of 3 per cent. This yield is expected to remain stable over the next two years.
The £571.3m company is listed on the FTSE 250. While it has underperformed the mid cap index over the long-term, it has outshone both the FTSE 250 and the FTSE 350 Food Producers index over the last five years.
Over five years, Cranswick has gained 154.29 per cent while the FTSE 250 made 91.06 per cent. The Food Producers index gained 132.85 per cent over the period.
Performance of stock vs indices over 5yrs
Source: FE Analytics
Gilead
Outside the UK, John Bowler, manager of the Schroder Global Healthcare fund, likes Giled – a global leader in the treatment of life-threatening diseases.
The US-based company has a market cap of $91bn and has no dividend.
“Gilead has been a leader in HIV/AIDS therapeutics and dominates the nucleotide analog class of anti-retroviral drug,” he said.
“This same technolgogy is now being used to produce the first treatment for Hepatitis C that does not require interferon. “
The company has gained an impressive 1.23.14 per cent over the last year, maintaining a steady climb over the last 12 months.
Bristol-Myers Squibb
As Marwood mentioned, biotechnology firms can be controversial depending on their testing regime; however, Bowler likes US-based Bristol-Myers Squibb which he says is on the cutting edge of cancer treatment.
“Bristol-Myers Squibb is at the vanguard of a new approached to treating cancer, specifically enabling the immune system to help control cancers,” he said.
“ What has got clinicians so excited about this area is the durability of responses seen – typical cancer drugs delay progression by three to six months (depending on tumour type and stage of disease) but ultimately the disease is fatal, these new drugs are seeing a significant subset of patients stable for over 12 months and some patients are stable years after treatment.”
The firm has picked up 26.81 per cent in the last year and has a yield of 3.21 per cent.