This Good Money Week, the latest Good Investment Review finds that sustainable funds have outperformed the sector average over the last five years, and throughout the economic recovery from Covid-19.
The October 2021 review from Good With Money and Square Mile Research reveals that, despite the ongoing financial turmoil of the global pandemic and Brexit, funds with a ‘responsible investing’ label continue to bring above-market returns.
Since 2017, the ethical UK equity funds monitored in the review have brought average returns of 58.7 per cent compared with 44.2 per cent for all funds in the sector. Meanwhile, the ethical global equity funds monitored have returned an average of 101.7 per cent compared with 87.4 per cent for the sector.
‘Assets under management’ in sustainable investing funds have now reached £280 billion – up more than 10 per cent in the last six months. There are now 348 funds in the 3D Investing universe, with 34 funds added over the last six months, an increase of 9.7 per cent.
John Fleetwood, founder of 3D Investing (now part of Square Mile), says: “The evidence continues to show that positive impact need not come at the expense of financial returns, and, if anything, investing for positive impact can improve returns.”
The review rates funds that have an ethical or sustainable approach according to the extent to which they “do good, avoid doing harm and lead change”.
The threat of climate change and opportunities for positive change
The latest edition takes an in-depth look at the threat of climate change and the potential opportunities for investors and the financial services industry to affect positive change.
Jake Moeller, Senior Investment Consultant at Square Mile, writes in the review that as well as reminding us of the threat climate change poses, conferences like the upcoming COP26 talks in Glasgow also bring positives.
He says: “Yes, climate change is a global negative externality, but there are investment opportunities in finding solutions. There are considerable benefits from bringing together governments, senior company managers and market participants.
“In essence, solving the problems need not just rely on altruism. The profit motive can sit alongside the global imperative. Fund managers are beginning to understand this, as are shareholders and investors. Doing good, avoiding doing harm, and leading change are indeed as acceptable fiduciary duties as generating a financial return.”
The review also includes essential commentary from Impax Asset Management, Jupiter Asset Management, M&G Investments, Montanaro, Morgan Stanley Investment Management, Pictet Asset Management, Schroders, Regnan, Storebrand Asset Management and Wellington Management.