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CORE RESPONSIBLE INVESTMENT
… takes one of the following approaches:
• Screening of investments (negative, positive & norms-based)
• Sustainability themed investing
• Impact/community investing
• Corporate engagement and shareholder action

We all want to do the right thing (well, the vast majority of us do) but we don’t want it to cost us.

Well here’s some great news.

Shout it from the rooftops, tell your friends and family…

…ethical investment funds outperform both the market and traditional fund managers.

‘Core responsible investment’ Australian equities funds outperformed both the ASX300 and average Large Cap Australian equities funds in all time periods across 1, 3, 5 and 10 years.

In it’s 14th annual Benchmark Report released recently, the Responsible Investment Association of Australasia provided the following total investment return figures.

Australian Share Fund Investment Returns 1 year 3 years 5 years 10 years
Responsible Investment Fund Average 6.9% 17.6% 8% 8.1%
Large-Cap Australian Share Fund Average 4.3% 14.2% 5.8% 6.8%
S&P/ASX300 Accumulation Index 5.3% 14.7% 6.5% 7.4%
In other words, it pays to invest ethically.

So now there’s no reason to delay – we should all invest responsibly. But what does that mean exactly and how do we go about it?

That’s where it gets a little complicated, because the figures above are for ‘core responsible investment’ funds which only comprise about $31.6 billion, or about 2.5% of total Australian assets under management.

The RIAA also reveals, however, that around 50% of total Australian assets under management – that’s around $629.5 billion – “undertake ESG Integration”, involving the inclusion of Environmental, Social and Governance factors into investment decision making. Effectively it’s a somewhat ‘watered down’ version of core responsible investment (see right) but it’s a lot better than making zero effort to invest responsibly, and it means that it’s not hard to find an at-least-partially-responsible fund manager.

Even better, the list of ESG managers includes some of Australia’s biggest and best performing funds management companies (see below).

What should you do if you want to invest responsibly?

If you manage your own portfolio, the good news is that the ethical investment community is only too happy to share their ideas about worthwhile ethical companies to invest in:

…or of course, ask us a question about ethical investment (in ‘comments’ below) and we’ll answer it for you.

If you invest through a managed fund (inside of, or separate from Superannuation):

What are your thoughts?

Do you invest responsibly? Would you like to know more about responsible investing? Join the conversation — leave a comment below and let us know what you’re thoughts are.

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Yellow Brick Road Financial Guru