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Ethical funds fall short of non-ethical over 12 months

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
28/02/2022

Ethical funds fall short of non-ethical over 12 months

Ethical funds have failed to outpace non-ethical funds over the past year during a notable period of stock market volatility, according to the latest analysis by Moneyfacts.co.uk. Despite more subdued returns, ethical funds have outpaced non-ethical funds in previous years and, during 2021, investors were keen to place their cash in responsible investment funds amid global attention for investing greener.

 

  • Ethical funds overall returned 3.97% over the past year, versus 6.06% for non-ethical funds, but overall ethical funds have outperformed non-ethical over longer investment periods.
  • Out of 26 comparable sectors, 19 ethical fund sectors produced positive average growth compared to 18 sectors for non-ethical funds, based on the past years’ data.
  • One fund sector, UK All Companies, has seen ethical funds in the sector returning an average of 8.58% versus 14.23% for non-ethical funds. One of the sectors to dip was Corporate Bond (£ Sterling), which saw losses for both ethical and non-ethical funds at -2.99% and -3.93% respectively.
  • According to The Investment Association (IMA) inflows to responsible investment funds totalled a record £16 billion, up £4.3 billion during 2020.

Ethical funds fall short of non-ethical over 12 months

Ethical funds have failed to outpace non-ethical funds over the past year during a notable period of stock market volatility, according to the latest analysis by Moneyfacts.co.uk. Despite more subdued returns, ethical funds have outpaced non-ethical funds in previous years and, during 2021, investors were keen to place their cash in responsible investment funds amid global attention for investing greener.

 

  • Ethical funds overall returned 3.97% over the past year, versus 6.06% for non-ethical funds, but overall ethical funds have outperformed non-ethical over longer investment periods.
  • Out of 26 comparable sectors, 19 ethical fund sectors produced positive average growth compared to 18 sectors for non-ethical funds, based on the past years’ data.
  • One fund sector, UK All Companies, has seen ethical funds in the sector returning an average of 8.58% versus 14.23% for non-ethical funds. One of the sectors to dip was Corporate Bond (£ Sterling), which saw losses for both ethical and non-ethical funds at -2.99% and -3.93% respectively.
  • According to The Investment Association (IMA) inflows to responsible investment funds totalled a record £16 billion, up £4.3 billion during 2020.

 

Fund past performance - 2022

 

1 year

3 years

5 years

10 years

15 years

All ethical funds

3.97%

32.63%

47.51%

146.40%

188.34%

All non-ethical funds

6.06%

25.05%

34.20%

114.30%

156.00%

IA sector performances

Ethical £ Corporate Bond funds

-2.99%

8.64%

14.93%

56.14%

86.31%

Non-ethical £ Corporate Bond funds

-3.93%

11.10%

17.06%

66.61%

103.51%

Ethical Mixed Investment 40-85% funds

5.40%

32.06%

49.42%

121.41%

211.67%

Non-ethical Mixed Investment 40-85% funds

6.50%

24.99%

32.14%

97.72%

127.42%

Ethical Global funds

2.57%

53.45%

80.00%

184.18%

209.65%

Non-ethical Global funds

9.54%

42.45%

56.77

200.02%

241.73%

Ethical UK All Companies funds

8.58%

24.88%

36.67%

115.23%

131.50%

Non-ethical UK All Companies funds

14.23%

25.12%

33.02%

109.94%

122.16%

Moneyfacts/Lipper Investment Management (IM). % Growth as at 1 February 2022, total return, UK net, no initial charges.

 

 

Fund past performance - 2022

 

1 year

3 years

5 years

10 years

15 years

All ethical funds

3.97%

32.63%

47.51%

146.40%

188.34%

All non-ethical funds

6.06%

25.05%

34.20%

114.30%

156.00%

IA sector performances

Ethical £ Corporate Bond funds

-2.99%

8.64%

14.93%

56.14%

86.31%

Non-ethical £ Corporate Bond funds

-3.93%

11.10%

17.06%

66.61%

103.51%

Ethical Mixed Investment 40-85% funds

5.40%

32.06%

49.42%

121.41%

211.67%

Non-ethical Mixed Investment 40-85% funds

6.50%

24.99%

32.14%

97.72%

127.42%

Ethical Global funds

2.57%

53.45%

80.00%

184.18%

209.65%

Non-ethical Global funds

9.54%

42.45%

56.77

200.02%

241.73%

Ethical UK All Companies funds

8.58%

24.88%

36.67%

115.23%

131.50%

Non-ethical UK All Companies funds

14.23%

25.12%

33.02%

109.94%

122.16%

Moneyfacts/Lipper Investment Management (IM). % Growth as at 1 February 2022, total return, UK net, no initial charges.

 

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Consumers may choose on principle to invest in ethical funds so it’s good to see an overall positive return over the past year. However, a return of 3.97% for ethical funds is less than the non-ethical sector of 6.06%, but it is worth keeping in mind that ethical funds have outperformed non-ethical funds overall during previous years. Fund past performance cannot of course guarantee future growth, and as 2022 has already demonstrated its potential for stock market volatility, it will be interesting to see how funds will perform moving forward.

“Throughout the Coronavirus pandemic some fund sectors have been more resilient than others and the past year has been no exception. There were 19 sectors for ethical funds producing positive average growth out of 26 comparable sectors, compared to 18 sectors for non-ethical funds, based on the past years’ Lipper IM data. This will be positive news for investors who are seeking out funds meeting Environmental, Social, and Governance (ESG) criteria, and during 2021 there was continued evidence of demand for responsible investment funds. According to The Investment Association (IMA) inflows to responsible investment funds totalled a record £16 billion, up £4.3 billion during 2020. Towards the end of 2021 there was of course the COP26 summit which covered the importance of increasing green investments.

“The outlook for the stock market is uncertain, so any concerned investors would be wise to seek advice before switching out of any fund sector, as a jumpy premature move may result in missing out on potential recovery. Good advice is essential to any investor to get some peace of mind, particularly at a time when the markets are volatile.”

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Consumers may choose on principle to invest in ethical funds so it’s good to see an overall positive return over the past year. However, a return of 3.97% for ethical funds is less than the non-ethical sector of 6.06%, but it is worth keeping in mind that ethical funds have outperformed non-ethical funds overall during previous years. Fund past performance cannot of course guarantee future growth, and as 2022 has already demonstrated its potential for stock market volatility, it will be interesting to see how funds will perform moving forward.

“Throughout the Coronavirus pandemic some fund sectors have been more resilient than others and the past year has been no exception. There were 19 sectors for ethical funds producing positive average growth out of 26 comparable sectors, compared to 18 sectors for non-ethical funds, based on the past years’ Lipper IM data. This will be positive news for investors who are seeking out funds meeting Environmental, Social, and Governance (ESG) criteria, and during 2021 there was continued evidence of demand for responsible investment funds. According to The Investment Association (IMA) inflows to responsible investment funds totalled a record £16 billion, up £4.3 billion during 2020. Towards the end of 2021 there was of course the COP26 summit which covered the importance of increasing green investments.

“The outlook for the stock market is uncertain, so any concerned investors would be wise to seek advice before switching out of any fund sector, as a jumpy premature move may result in missing out on potential recovery. Good advice is essential to any investor to get some peace of mind, particularly at a time when the markets are volatile.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

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Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert