You are here: Home - Investing - Experienced Investor - News -

Despite strong performance FE Trustnet urges caution when looking at ethical funds

0
Written by: Adam Lewis
23/10/2015
Research from FE Trustnet shows that over the past decade eight out of the top 10 best performing ethical/sustainable funds have outperformed their specific IA peer groups by double-digit returns.

This week has seen specific emphasis on ethical funds given that it is Good Money Week, an annual event in which the industry looks to to raise awareness of what it has to offer. To coincide with this FE Trustnet has looked at the top performing ethical funds over the past decade and how they have pitted against their respective sectors.

The best performer over the last 10 years according to FE Trustnet was the Kames Ethical Equity fund, managed by Audrey Ryan. Over this time period to 22 October 2015, the fund returned 160.33% versus the IA UK All Companies average fund return of 96.21%, an outperformance of 64.12 percentage points.

Of the top 10 performing funds over the time period, eight are in the IA UK All Companies sector and two – Edentree Amity International and Henderson Global Care Growth – sit in the IA Global sector.

Despite this strong performance Charles Younes, a research manager at FE Research, urges investors to look carefully at such funds to assess if they are aligned with the investor’s view on what ethical investing is.

“For example some funds may invest in large companies which have been found to avoid paying the amount of taxes or bribery scandals, while other firms may outsource business to companies with a less ethical stance,” he says. “So it’s worth really looking into the components of a fund. Ethical investing can be very subjective so you need to look at how you feel about certain practices and make a call depending on that.”

Meanwhile Younes says that when analysing the historical performance of ethical funds, it should be noted that some managers simply negatively screen stocks meaning they exclude some sectors such as oil or gas.

“As a result, some of the relative gains were achieved from strong sector allocation rather than stock selection,” he adds. “What is worth looking for is a manager who is a consistent stock picker and who is able to add value across the cycle.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and the fresh round of walkouts take place tod...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week