perform just as well as non-ethical ones, a new report looking at
their relative performance over the past 10 years has found.
The report focuses
on funds registered for sale in the UK and finds ethical
investments broadly match non-ethical ones in UK and global
equities, although European equities, excluding the UK, lag behind
their non-ethical rivals.
responsible investment (SRI) funds have sometimes laboured under
the misconception that investors sacrifice returns if they invest
in funds with an ethical or SRI policy,' said Edward Jewson, chief
executive of investment consultants Jewson Associates, which
compiled the report. 'But our research suggests this is not the
case over the long term.
'What we have found,
however, is that returns from ethical funds in the UK are, to some
extent, correlated with the performance of small- and mid-cap
stocks, and so are likely to be more volatile.'
The report -
compiled for Oxford University - finds that in UK equities, ethical
funds outperformed the market on average and the non-ethical peer
group over the past one, three and five years, and broadly matched
the market and non-ethical funds over 10 years.
In global equities,
ethical funds outperformed over one, three, five and seven years,
but lagged modestly behind over 10 years. They outperformed
non-ethical funds over all of these periods apart from five years.
The report points to ethical funds' structural bias towards mid and
small-cap companies as a key factor in determining their