Long-term investors will not incur extra cost in taking an ethical stance with their money, but may be affected by higher risk, according to new research.

A report published today by independent investment consultants Jewson Associates showed over the long term, there appears to be no permanent or inherent cost in taking an ethical stance. However, such investments are slightly riskier or more volatile, being closely correlated to the performance of small- and mid-cap funds.

The report focused on the performance of socially responsible investment (SRI) funds, particularly UK equity funds, registered for sale in the UK over the ten-year period to the end of 2007.

Edward Jewson, chief executive of Jewson Associates, said: “SRI funds have sometimes laboured under the misconception that investors sacrifice returns if they choose to invest with an ethical or SRI policy, but our research suggests this is not the case over the long term.

“What we have found, however, is that returns from ethical funds in the UK are to some extent correlated with the performance of small- and mid-cap stocks and are therefore likely to be slightly more volatile.”