APRIL 2021


Register with PP

Newsletter, Jobs & Event Alerts


Ethical investing no longer trade-off between returns and principles

25 September 2018

While the take up of ethical funds remains low, the latest statistics have shown leading ethical indices outperformed their non-ethical peers over the past decade.

Despite the retail ethical industry launching 34 years ago, data from the Investment Association show funds with ‘ethical’ mandates now total £16.7 billion of total assets under management, representing just 1.3% of total industry assets.

However, in the 10 years to 20 September 2018, the FTSE4Good UK index beat the FTSE All Share Index, returning 107.23% versus 105.5%. Equally in the US, the FTSE4Good US Index returned 204.24% compared to 162.92% for the S&P 500 over the past 10 years.

Adrian Lowcock, head of personal investing, Willis Owen (pictured), said: “Fortunately, ethical investing is no longer a trade-off between returns and principles. In fact, the performance of ethical benchmarks over the last ten years has been better than non-ethical counterparts. Much of this has been driven by the performance of oil and mining sectors which have lagged the market over the past ten years as well as the tobacco sectors. Many ethical funds have no exposure to these areas and have therefore protected investors from the falls.”

Lowcock says that ethical funds have also benefitted from the outperformance of smaller and mid-sized companies, with ethical funds often shying from large companies.

He added: “Whilst the uptake of specific ethical funds remains low, the overall sector has evolved significantly over the past 30 years. Investors no longer have to avoid certain types of companies or accept a lower rate of return because of their morals.

“The evidence is growing that companies which behave responsibly and incorporate environmental, social and governance principles into their businesses are better custodians of those companies and in turn provide better long term returns.”

This weekend sees the start of the Good Money Week (29th September to 6th October) which looks to promote sustainable responsible and ethical investing. The campaign is in its’ 11th year.

Professional Paraplanner