While investment returns have strengthened to levels last seen before the global financial crisis, responsible investment funds have surged even higher, according to the 2013 Responsible Investment Benchmark Report.
The research found responsible investment funds have outperformed both the benchmark and the average of mainstream funds over short and long terms in both Australian and international equities.
The annual benchmark report, produced by the Responsible Investment Association Australasia (RIAA), maps the growth in funds under management and the sector’s performance against mainstream investment funds in Australia and New Zealand.
“With eight of the top 10 investment managers in Australia having now declared themselves responsible investors by signing on to the United Nations-backed Principles for Responsible Investment, it would be fair to say that responsible investment has become mainstream,” said RIAA chief executive Simon O’Connor.
“The strong outperformance of ethical and responsible investment funds should finally put to bed the myth that a more responsible approach to investing leads to lower returns.
“With more of the region’s investments being made under responsible investment mandates, the extra analysis undertaken for every investment decision means responsible investors have a deeper understanding of their investments, so it should be no surprise they are earning better returns.”
Key findings of the 2013 Responsible Investment Benchmark Report include:
- As at December 31, 2012, funds under management in responsible investment portfolios in Australia totalled $152 billion or 16 per cent of total assets under management (TAUM) – including all ethical and socially responsible funds, as well as the funds managed under environmental, social and governance integration that are rated as above average. (In 2011, the figures were 13 per cent of TAUM and $117 billion)
- Core responsible investment funds are delivering better returns than both the benchmark and the average of all mainstream funds in all but one category across time periods (one, three, five and 10 years) in three major investment categories – Australian equities, international equities and multi-sector growth funds.
- The five-year returns post-global financial crisis have been stronger in all responsible fund categories compared with the benchmark and average mainstream funds. In Australia, environmental, social and governance integration has proven to be the dominant method of responsible investment, representing 89 per cent of the overall market total ($135 billion), having experienced 33 per cent growth between 2011 and 2012.
