Why are investors shunning ethical funds?
By Philip Scott, Money Marketing
Investors who have aligned their principles with their portfolio choices over recent years have enjoyed firm gains against more conventional investment vehicles. So why do ethical funds continue to exist on the periphery of the market?
Good Money Week, formerly known as National Ethical Investment Week, ran from 18-24 October and once again put the sector in the spotlight.
Numbers from Moneyfacts and Lipper show over the past three years to 15 October the typical ethical/SRI fund has delivered a total return of 30 per cent versus 24 per cent from the average non-ethical portfolio.
Five-year numbers paint a similar picture, with the two styles giving respective returns of 40 per cent versus 34 per cent. Over the past 10 years, ethical funds fall back but only just, with an overall average of 78 per cent against an 83 per cent mean return from non-ethical vehicles.
But despite the respectable performance, ethical funds are failing to gain any serious traction among UK investors.
The UK’s retail ethical investment industry has been around since 1984 when the Friends Provident Stewardship fund, the UK’s first ethical unit trust, launched.
Read the full article here.