The research, which compared the performance of ethical funds within the four IMA sectors that contain the most ethical funds (£ Corporate Bond, Global, Mixed Investment 40-85% Shares and UK All Companies), provides further evidence to help shatter the popular belief that ethical and sustainable investments will always underperform traditional investment funds.
Table 1: Ethical funds versus non-ethical funds (percentage growth)
|IMA sector performances||1 year||3 years||5 years||10 years|
|Ethical £ Corporate Bond funds||7.90%||27.80%||41.30%||56%|
|Non-ethical £ Corporate Bond funds||7.30%||25.70%||38.90%||57%|
|Ethical Mixed Investment 40-85% Shares funds||4.00%||38.80%||48.70%||90.90%|
|Non-ethical Mixed Investment 40-85% Shares funds||2.40%||27.40%||36.10%||96.20%|
|Ethical Global funds||1.20%||34.50%||35.10%||107.70%|
|Non-ethical Global funds||2.70%||36.70%||44.40%||110.50%|
|Ethical UK All Companies funds||0.30%||44%||58.90%||101.40%|
|Non-ethical UK All Companies funds||0.50%||40.60%||55.30%||111.20%|
|Average ethical fund (within the 4 IMA sectors above)||3.40%||36.30%||46%||89%|
|Average non-ethical fund (within the 4 IMA sectors above)||3.20%||32.60%||43.70%||93%|
|Source: Investment Life and Pensions Moneyfacts/Lipper. % Growth as at 13 October 2014, total return, UK net, no initial charges|
Some individual ethical funds have particularly excelled. For instance, within the UK All Companies sector, Royal London UK Ethical Equity is ranked 4th out of 262 funds over one year and Kames Ethical Equity is ranked 10th out of 168 funds over 10 years. Meanwhile, Rathbone Ethical Bond is the sixth best performer over one year in the £ Corporate Bond sector and is fourth over three and five years.
Richard Eagling, Editor of Investment Life & Pensions Moneyfacts said: “The latest ethical fund performance figures once again demonstrate that investors can stick to their principles and still enjoy healthy investment profits. In many cases ethical fund returns have outperformed their conventional rivals and are winning the profits versus principles debate. Hopefully, such results will show that adopting ethical and sustainable practices actually makes sound business sense.”