Ethical fund performances impress

by Gill Montia

Story link: Ethical fund performances impress

Life & Pensions Moneyfacts, the independent financial website, has published new data on ethical investments, which shows ethical funds producing returns well ahead of traditional funds.

The survey compared ethical funds, conventional non-ethical funds, index trackers and the FTSE 100, over one, three, five and 10 years.

Looking at periods of both one and three years, the average ethical fund delivered higher returns than both non-ethical funds and the FTSE 100 index.

Over the past 12 months, the average ethical fund recorded growth of 18.3%, compared with the 13.7% recorded by the average non-ethical fund.

The performance of ethical funds also compares favourably with index trackers (15.7% average growth) and the FTSE 100 (13.2% average growth).

Over three years, ethical funds remained ahead of non-ethical funds with average growth of 57.2%, compared with 52.3%.

The survey did find that over the longer term, returns on non-ethical investment funds do gradually move ahead of ethical funds, by around 1% over five years and just under 6% over 10 years.

In August 2006, non-ethical funds showed an advantage over ethical funds of approximately 12% over five years, and almost 19% over 10.

However, this should be seen in the context of the strong growth achieved by ethical funds over the last year.