Australian Ethical fund performance is booming

– International Equities Trust produced 51.9% over past 12 months
– Smaller Companies Trust produced 16.9% over past 12 months
– Larger Companies Trust produced 24.2% over past 12 months

“We have provided consistently high returns for our clients from a sustainably-focused investment process,” said Australian Ethical CIO, David Macri.

“This great performance of the Smaller Companies Trust over the longer term is testament to our consistent investment philosophy. We have applied a rigorous discipline to our stock selection and portfolio construction. The results prove that we have added value consistently over a full investment cycle, without taking undue risk.

“While our short-term performance will tend to vary significantly with the market and indeed our peers, investors need to be mindful of the long term when investing in equities, in particular small caps given the heightened level of volatility.

“What we have shown is that our performance is consistently better than both the market and most of our peers,” said Australian Ethical CIO, David Macri.

Australian Ethical’s flagship fund, the Smaller Companies Trust, has achieved above median performance in the retail “All Cap” Australian Equity funds (Mercer) over all discrete 1-year periods between 1 and 20 years ending 31-Jan-14. Indeed over 13 of those 20 periods, it achieved performance in the upper quartile of funds.

Macri credits this to the ability for AEI to construct portfolios without regard to benchmark indices.

“The index itself is a flawed portfolio construction process. No active manager in their right mind would construct a portfolio using just market cap as the input. What we are able to do is go back to first principles and try to build an efficient portfolio with regard to risk and return, regardless of index weights. Yes, we filter the universe based on ethics, but all managers filter their universes, be it by market cap or quantitative techniques. The result is a different portfolio, but by no means a less efficient one. The results prove this.

“The fact that our portfolios are so different actually should appeal to the broader market to consider adding this fund to their overall portfolio. What the research will show is that the benefits to the overall risk/return profile will improve substantially. This is the beauty of diversification!

“What’s the point in having too many managers who do the same thing?” said Mr Macri.