New research has found responsible investments is bouncing back with lower costs, more choices and stronger returns as a challenging year in global equity markets ends.
A new report found a 71 per cent increase in ethical Exchange Traded Funds (ETFs) brought to market over 12 months with the cost of the average ethical ETF decreasing from 0.51 per cent in 2017 to 0.45 per cent in 2018.
CEO of Balance Impact, Emily Hollingum, reported that the range of impact areas has increased with equality and diversity the largest growth in category.
“We were excited to see the largest growth area amongst our categories was in Equality and Diversity. Five new ETFs were added, covering both gender diversity and minority empowerment,” Hollingum said.
“With more options and lower cost, now is a great time to start investing responsibly.”
A new low-cost entrant to the market is Vanguard’s Ethically Conscious International Shares Index ETF, which is listed on the ASX and charges 0.18 per cent.
“It has been wonderful to see an increase in the number of ethical ETFs available on the Australian stock exchange. In the last year there have been four new ethical ETFs listed, covering both international shares and bonds,” Hollingum said.
The range of impacted areas ETFs cover has also increased, with investors now able to purchase an ETF in low carbon and fossil-fuel free companies, renewable energy, minority empowerment, organic food and the UN’s Sustainable Development Goals.
The report dispelled misconceptions that responsible investment underperform in the market. Outperformance examples include BetaShares Shares Sustainability Leaders ETF, which over the last year has had a return of 14.28 per cent.
“In June, Goldman Sachs issued the first ethical ETF [and] it ended the day with $251 million USD of assets, making it the most successful ethical ETF launch ever and in the top 10 equity ETF launches in history,” Hollingum said.
Research from the Responsible Investment Benchmark Report 2018 also showed the responsible investments tend to outperform over the long run.
Hollingum added that ETFs “offer a great way to add a responsible investment to your portfolio”.