The social value of ethical investing is often touted, but it’s a little-known fact that many new offerings are outperforming the market.
Speaking with Nest Egg, the chief investment officer for Australian Ethical, David Macri, believes investors should be more aware of the profits on offer.
“You’re making more money while leaving the world in a better place,” said Mr Macri.
As an example, Australian Ethical share funds have delivered 10.7 per cent per annum (after retail fees) over a 10-year period. The S&P/ASX 300 accumulation index returned 9.9 per cent for the same period, according to Morningstar data. The standard deviation, or risk, is also lower than the S&P/ASX 300.
Looking at a longer-term view, since inception in late 1994, the fund has delivered 10.0 per cent per annum compared with the 9.2 per cent p.a. from the S&P/ASX 300.
What stops investors?
Mr Macri believes investors are worried about an ethics-based strategy as they are relatively new to the established market.
“The fact is we are different. That means people are hesitant, reluctant. They question and rightly so. However, we encourage this analysis, especially when they are considering ethical investing,” he said.
He also encouraged investors to think about the long-term consequences of their investment decisions on the environments they are living in or putting money into.
“Investors who choose companies based purely on profit and say they are investing for the long term aren’t really considering the impact of the world that their members are going to be living in when they retire,” continued Mr Macri.