Articles: Ethical investing makes more money

         Ron
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Ethical investments make more money

from: MyFinances.co.uk August 16, 2005

Ethical funds have outperformed the FSTE 100 and index-tracking funds over the last ten years, proving that profits and principals can go hand in hand.

The latest survey from the investment, life and pensions service of price comparison website Moneyfacts.co.uk finds that over a ten-year period, the average ethical fund has delivered returns of 75 per cent - higher than both the average index tracker fund and the FTSE 100 index.

"Supporters of ethical investing agree there is a great opportunity for funds to outperform index-trackers as there is a much greater emphasis on active management in seeking out stocks which meet the criteria of the fund from both a financial and ethical perspective," said Richard Eagling, editor of Investment, Life & Pensions Moneyfacts.

"The average ethical fund has achieved better growth than the FTSE 100 (with the exception of the last 12 months). This is particularly prominent over ten years where ethical funds posted a return more than 20 per cent ahead of the index. These results should give investors confidence that it is possible to profit without sacrificing your principles."

The Moneyfacts survey looks at the performance of ethical funds, conventional non-ethical funds, index trackers and the FTSE 100 over one, three, five and ten years.

Index-trackers, able to invest in blue chip companies without question, offer an interesting comparison with ethical funds - which are often forced to rule out many of these stocks.

Over the last year, index-trackers outperformed ethical funds, producing returns of 13.34 per cent - almost exactly 50 per cent higher than the return on the average ethical fund.

But over the longer term this levels out, with ethical funds narrowing the gap on three and five-year investments and producing far stronger returns over ten years than index trackers.

Over the last 12 months ethical and less limited non-ethical funds grew by a very similar amount, with returns of 8.87 per cent and 9.38 per cent respectively.

But over the long term the figures reverse.

Looking at the ten-year horizon, the average non-ethical unit trust has risen 87.63 per cent while the average ethical fund has grown just 74.84 per cent.

Both outperformed index-trackers and the FTSE 100 by a significant margin, Moneyfacts reports.

But, as ever, the choice of fund can be key.

An investment in a well managed ethical fund can comfortably hold its own against non-ethical funds, over any investment horizon.

Moneyfacts points to the F&C Stewardship Income fund, this is ranked ninth out of 64 UK equity income funds over five years, and seventh out of 71 funds over three years.

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