Ethical investors reaping their rewards
The latest survey by Investment, Life & Pensions Moneyfacts has revealed that ethical investors are being rewarded for following their conscience, with ethical fund returns surging ahead of those on offer from mainstream traditional funds.
The survey examined the performance of ethical funds, conventional non-ethical funds, index trackers and the FTSE 100 over one, three, five and ten years (see table below). It found that over a one and three-year period, the average ethical fund has delivered superior returns than both non-ethical funds and the FTSE 100 index.
Ethical funds versus non-ethical unit trusts (Percentage growth)
|
1 year |
3 years |
5 years |
10 years |
Ethical Funds |
18.36% |
57.23% |
65.96% |
97.75% |
Non-Ethical Funds |
13.73% |
52.39% |
67.11% |
103.47% |
Index-trackers |
15.58% |
59.15% |
67.12% |
81.76% |
FTSE 100 |
13.28% |
48.02% |
41.91% |
43.51% |
Source: Lipper Hindsight. % Growth as at 1 July 2007, total return, UK net, no initial charges
Over the last 12 months the average ethical fund has posted growth of 18.3% compared with 13.7% growth from the average non-ethical fund, 15.7% from index trackers and just 13.2% from the FTSE 100. Ethical funds are also now outstripping non-ethical funds over three years with growth of 57.2% compared with 52.3%.
Although over the longer term the non-ethical returns do gradually pull ahead, the margins of victory of around 1% over five years and just under 6% over ten years are relatively small. It is also interesting to note the amount of ground that ethical funds have made up over the last 12 months, as at this time last year non-ethical funds enjoyed an advantage of around 12% over five years and almost 19% over ten.
Considering the excellence of their all round performance, it is little surprise to find that some individual ethical funds are performing admirably within their IMA sectors in comparison with their conventional counterparts. F&C’s long running Stewardship Income fund is ranked second within the UK Equity Income sector in terms of cumulative performance over one year. Jupiter Ecology lies sixth within the Global Growth sector out of 167 funds for cumulative returns over three years, whilst in the UK All Companies sector, AEGON Ethical Equity is ranked 16th out of 290 over this term. The Balanced Managed sector sees Henderson Global Care Managed ranked second after one year and eighth over three.
Richard Eagling, Editor of Investment, Life & Pensions Moneyfacts, said: “The strong investment returns enjoyed by ethical funds in recent years have helped to shatter the misguided belief that ethical investments will always underperform traditional investment funds and that sustainable business practices restrict company growth. Instead, ethical funds have outperformed both their non-ethical rivals and the FTSE 100 over the last three years. These results provide compelling evidence that those companies who adopt sustainable practices should be tomorrow’s winners.”
outstripping non-ethical funds over three years with growth of 57.2% compared with 52.3%.
Although over the longer term the non-ethical returns do gradually pull ahead, the margins of victory of around 1% over five years and just under 6% over ten years are relatively small. It is also interesting to note the amount of ground that ethical funds have made up over the last 12 months, as at this time last year non-ethical funds enjoyed an advantage of around 12% over five years and almost 19% over ten.
Considering the excellence of their all round performance, it is little surprise to find that some individual ethical funds are performing admirably within their IMA sectors in comparison with their conventional counterparts. F&C’s long running Stewardship Income fund is ranked second within the UK Equity Income sector in terms of cumulative performance over one year. Jupiter Ecology lies sixth within the Global Growth sector out of 167 funds for cumulative returns over three years, whilst in the UK All Companies sector, AEGON Ethical Equity is ranked 16th out of 290 over this term. The Balanced Managed sector sees Henderson Global Care Managed ranked second after one year and eighth over three.
Richard Eagling, Editor of Investment, Life & Pensions Moneyfacts, said: “The strong investment returns enjoyed by ethical funds in recent years have helped to shatter the misguided belief that ethical investments will always underperform traditional investment funds and that sustainable business practices restrict company growth. Instead, ethical funds have outperformed both their non-ethical rivals and the FTSE 100 over the last three years. These results provide compelling evidence that those companies who adopt sustainable practices should be tomorrow’s winners.”
For a full copy of the Socially Responsible Investment survey please contact: Richard Eagling, Editor on 08451689641 or email: reagling@moneyfacts.co.uk or Suzanne Greener on 08451689643
Moneyfacts.co.uk has recently launched a new section dedicated to ethical personal finance including all of the latest ethical fund performance. To check out the new Moneyfacts.co.uk ethical section, visit www.moneyfacts.co.uk/ethical/default.aspx
Moneyfacts Group
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