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Move over, mainstream: ESG excels
Responsible investing is proving its worth in the investment game, beating out the total return of the S&P/ASX 300 over the last decade.
Move over, mainstream: ESG excels
Responsible investing is proving its worth in the investment game, beating out the total return of the S&P/ASX 300 over the last decade.
A study conducted by the Responsible Investment Association Australasia (RIAA) and KPMG has found that responsible funds have outperformed mainstream funds over one, three, five and 10-year time horizons.
Not only that, the Responsible Investment Benchmark Report 2020 highlighted that responsible and ethical performance has continued to shine, despite the market disruption brought on by COVID-19.
The report revealed the average responsible investment fund outperformed the S&P/ASX 300 total return after one year (by 0.9 per cent), three years (by 1.0 per cent), five years (1.0 per cent) and 10 years (1.2 per cent).
It also beat out Morningstar’s Australia fund equity large blend – after one year, responsible investment funds posted 2.4 per cent better returns, after three years it was 2.3 per cent better returns, and after both five and 10-year spans, the returns had widened by 2.4 per cent.
According to RIAA CEO Simon O’Connor, “It’s become clear that responsible investors are ahead of the game.”
“They are identifying the key themes influencing markets and returns, which helps them to better navigate turbulent times, avoid the biggest risks and capture more opportunities.”
He said companies and assets are unlikely to thrive in 2020 and beyond “if they ignore issues such as climate change, health and safety, labour rights, corruption and lack of diversity”.
“Investors are fast realising that consideration of these issues provides more informed investment decisions, such as valuation and asset allocation.”
There is now $1,149 billion worth of responsible investments in managed assets – an increase of 17 per cent from 2018.
It means responsible investment now represents 37 per cent of Australia’s total $3.155 trillion in professionally managed assets.
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