Ethical and sustainable investments have performed 6% better than non-ethical funds
Ethical and sustainable investment funds have performed better over the last year than their non-ethical counterparts, new research shows.
According to research by independent comparison website Moneyfacts.co.uk, the average ethical fund has posted gains of 24% over the 12 months to August 2013, compared with 18% growth from the average non-ethical fund.
The findings also revealed that ethical funds have out-performed their mainstream counterparts over the last three years, with growth at 36% and 31% respectively.
“Ethical funds have clearly benefitted from their lack of exposure to ‘unethical sectors’ such as mining, oil and gas and tobacco, which have been among some of the poorer performing areas of the market over the last 12 months,” said Richard Eagling, head of investments and pensions at Moneyfacts.co.uk.
Despite encouraging short-term performance, the findings indicate that ethical and sustainable investment has struggled over a longer period of time. Over ten years ethical funds grew by 56%, less than half of the 128% growth in the mainstream sector.
However, experts believe that these figures are distorted by the fact that sectors such as China and global emerging markets do not house any ethical funds with a ten-year record.
According to data from sustainable investment research firm EIRIS, there is around £11bn invested in green and ethical funds in the UK, up from £4bn 10 years ago, and far surpassing predictions made by commentators at the time of the first ethical unit trust launch, who said the ethical market would reach no more than £500m.
Raj Singh, programme director at the UK Sustainable Investment and Finance Association (UKSIF), said: “These figures not only demonstrate a consistently healthy appetite for green and ethical investment options, but provide further evidence that investors need not sacrifice good returns when following their values.”