RESEARCH: The Responsible Investment Sector In Australia Is Outperforming The ASX 300

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Responsible investment in Australia is paying dividends in cash as well as being a so-called ethical choice.

The research house Lonsec has released its annual rankings showing Australian equity responsible investments averaged a return of 15.7% for the year to August 2014.

The 2014/15 Australian & Global Equity Responsible Investment Sector Review highlights the positive performance and reduced volatility for responsible investment in Australian equity funds.

The report says the Australian equity peer group average returned 17.1% a year for three years.

This outperformed both the ASX 300 index (14.2% over 1 year and 14.0% p.a. for three years) as well as the Lonsec core Australian equity peer group (13.8% and 16.6%).

The ANU recently divested about 5.1% of its Australian equity holdings, or about $16 million, much of it resources stocks, after implementing a Socially Responsible Investment Policy.

“It’s a common misperception that responsible investment will not achieve a reasonable rate of return on their funds but in reality this is clearly not the case,” says Steven Sweeney, Senior Investment Analyst at Lonsec.

Published for more than a decade, Lonsec’s responsible investing universe includes funds adopting a variety of intensity in their responsible investment.

“The challenge for advisers is to recommend the right funds that align with their clients’ ethical investment motivation,” Sweeney says.

Traditional ethical funds have different approaches.

Some fund managers, such as Perpetual, Australian Ethical and Hunter Hall, are providing fossil fuel free options.

The 2014/15 Australian and Global Equity Responsible Investment Sector Review covered seven Australian equity and two global equity funds.

Lonsec awarded its premier Highly Recommended rating to the Perpetual Wholesale Ethical SRI Fund. Five funds were assigned a Recommended.

Chart: Lonsec’s report, Performance of RI Australian Equity funds to August 2014. n

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