As Good Money Week begins, the latest Good Investment Review looks at the challenging market for responsible funds – those that make a positive impact on people and planet – and why investors should stay focused on the longer term.
The October 2022 Review reveals that the financial performance of responsible funds has been particularly hard hit over the last 12 months. However, they continue to do well over the longer term, outperforming their traditional peers on average over the last five years.
Since 2017, the ethical UK All Companies funds monitored in the review have brought average returns of 14.6 per cent compared with 12.6 per cent for all funds in the sector. Meanwhile, the ethical Global Equity funds monitored have returned an average of 59.2 per cent compared with 48.4 per cent for the sector.
The Review from Good With Money, Square Mile Research and The Big Exchange explores what the currently challenging economic times mean for responsible investing funds, and the crucial role they play in the transition to a better, brighter future.
Anna Mercer, Head of 3D Research, said: “2022 has been a hard year in many ways. While the worst pandemic in living memory seems now finally to be receding, from the cost-of-living crisis to armed conflict to extreme weather events, there has been precious little positive news to lift spirits. This extends to financial markets, and while investors of all stripes have suffered, responsible investment funds have been particularly hard hit.
“It is at times like this that it is vital to block out short-term noise and keep an eye fixed on a more distant horizon. All investment strategies fall in and out of favour, but the very real problems faced by the planet and the people who live on it will not go away without positive action now. Responsible Investment funds play an incredibly important role in supporting this positive action by investing in compelling businesses which can be part of the solution whilst delivering financial returns.”
The Review includes essential commentary from key sponsors, including:
3D Investing and The Big Exchange: The driving forces behind responsible investing and how to build investor trust
Good With Money: Why responsible investing is more important now than ever
Aegon Asset Management: Why the cost of NOT taking drastic action will be huge
Baillie Gifford: How impact investing works in practice
Liontrust: The alignment between doing good things and business success
Schroders: The role of climate leaders and how they can offer investors lower risks
Wellington Management: The importance of stewardship
Pictet Asset Management: The importance of engaging with ‘problem’ stocks
Fidelity International: Their approach to active ownership and three key themes for 2022
TwentyFour Asset Management: ESG scoring and how this works in practice
The twice-yearly 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”.