Reaping the rewards from ethical funds
New data from Investment, Life & Pensions Moneyfacts shows that ethical investors are being rewarded for following their consciences, 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 1, 3, 5 and 10 years.
It found that over a 1 and 3-year period, the average ethical fund has delivered superior returns than both non-ethical funds and the FTSE 100 index. (Source: Lipper Hindsight. % Growth as at July 1st 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 3 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 5 years and just under 6% over 10 years are relatively small. Worth pointing out too is the amount of ground that ethical funds have made up over the last 12 months, given this time last year non-ethical funds enjoyed an advantage of around 12% over 5 years and almost 19% over 10.
F&C’s long running Stewardship Income fund, for example, 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 3 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 1 year and eighth over 3.