From ‘Ethical Investor’ 22 November, 2010:
http://www.ethicalinvestor.com.au/index.php?option=com_content&task=view&id=3998&Itemid=402
The average responsible investor in Australia is getting better returns than the mainstream counterpart for all periods of one, through three, five and seven years in two of the three major investment categories, a new Responsible Investment Association Australasia (RIAA) survey reveals.
According to analysis of the performance of publicly offered responsible investment managed portfolios, Australian and overseas share funds staged a partial recovery in the 12 months to June from losses suffered on the back of the global financial crisis.
Responsible investment funds participated in this recovery more strongly than both mainstream funds and the benchmark. (See www.responsibleinvestment.org).
While losses over the three-year period of the financial crisis remain, on a relative basis the average responsible investment Australian share fund outperformed the benchmark S&P/ASX 300 Index, while the average mainstream fund underperformed the benchmark.
Over periods of three years or more, the average responsible investment fund again outperformed the average mainstream fund as well as the benchmark.
Louise O’Halloran, executive director of RIAA, said the Responsible Investment 2010 findings show that taking environmental, social and governance (ESG) issues into account is both “profitable and smart”.
“The 2010 benchmark report figures exemplify the disappointment experienced by more and more people about the inability of traditional financial models to recognise the inherent impact of ESG issues on investments.
The research, conducted on behalf of the RIAA by Corporate Monitor, found that in the 12 months to June, core responsible investment – a combination of managed responsible investment portfolios, community finance, green loans, responsible investment portfolios of charities and client portfolios of financial advisers – rose 13 per cent in to $18.19 billion from a revised $16.15 billion a year earlier.
Managed responsible investment portfolios alone rose 10 per cent to $15.41 billion from $14.02 billion.
Growth in responsible investment portfolios fared a little better than the broader market with total assets under management of all types of managed portfolios rising 9 per cent in the same period.
The main factor contributing to this recovery was positive investment performance of $1.05 billion, supported by net inflows into established funds of $544 million and support for new funds of $175 million. Offsetting this somewhat were portfolios that were either wound up or removed from the survey to the value of $380 million.
The average return over the year of the largest category, Australian share funds, was 15.09 percent, better than the average return of 11.56 per cent for mainstream Australian share funds.
This outperformance trend is also generally reflected over longer timeframes and in other categories such as overseas shares and balanced growth funds.
