30 September 2020

Australian Ethical is one of Australia's leading ethical fund managers. By investing responsibly in well-managed ethical companies, we deliver competitive financial performance to our clients and positive change to society and the environment. Since our inception in 1986, our Ethical Charter has guided all investment decisions and underpinned our business practices. Every year 10 per cent of our profits* are distributed to charitable organisations and social impact initiatives through The Australian Ethical Foundation.

Investment objective

To provide long-term growth focusing on Australian companies that meet the Australian Ethical Charter.

Investment strategy

The opportunity to invest in a diversified share portfolio of companies predominately listed on the ASX and selected on the basis of their social, environmental and financial credentials. The Fund utilises an active stock-picking management style with stocks generally selected for growth rather than income, with a bias towards smaller capitalisation stocks listed on the ASX. All stocks are chosen on the basis of relative value where we deem the risks are being adequately priced.

Performance

ResetPerformance line chart
Powered by data from FE fundinfo

Annualised performance

1m3m6m1y3y5y10ySince inception
Fund1.2%9.4%33.2%2.4%9.5%11.1%-14.1%
Benchmark-3.6%-0.1%16.7%-10.0%4.2%7.1%-8.7%

Calendar performance

CY 2019CY 2018CY 2017CY 2016CY 2015
Fund28.1%-2.8%10.6%9.2%21.9%
Benchmark22.5%-6.5%15.7%6.2%15.0%

Why invest ethically?

Portfolio diversification: Diversify your portfolio by investing in companies and sectors not well covered by other fund managers and brokers.

Help build a better world: Invest in the new, low‐carbon economy, fund medical and technology breakthroughs, efficient transport and more.

Promote human rights: We strive to avoid any investment in companies involved in the poor treatment of asylum seekers or the exploitation of workers through poor working conditions.

Current top 10

Description
%
MACQUARIE TELECOM GROUP LTD ORD F/PD DS
5.1%
HEALIUS LTD
4.0%
BIGTINCAN HOLDINGS LTD
2.9%
CONTACT ENERGY LTD
2.8%
WESTPAC BANKING CORPORATION ORD F/PD SHARES
2.8%
BANK OF QUEENSLAND LIMITED
2.7%
NITRO SOFTWARE LTD
2.7%
NATIONAL AUSTRALIA BANK
2.7%
COCHLEAR LTD
2.6%
MIRVAC GROUP STAPLED SECURITIES
2.6%

Commentary

For the quarter, the Fund pleasingly achieved an absolute return of 9.1% (9.4% Wholesale Fund) against the fund’s benchmark, the S&P/ASX 300 Index, which declined 0.1%. The Australian Shares Fund’s 12-month performance was 1.5% (2.4% wholesale) against negative 10% for the benchmark.

The Australian market started the quarter strongly, with August particularly strong (ASX 200 up 2.2%) boosted by some better-than-expected earnings in the reporting season, solid economic data and renewed hopes for a vaccine. However, September saw the five-month rally end with the ASX 200 falling 4% as investors became nervous about fears of a second global COVID-19 wave, poor sentiment regarding the US Presidential election and growth concerns.

Locally, the effects of the lockdown in Victoria became more apparent, with a higher level of unemployment and Federal Treasurer Josh Frydenberg warning the Australian economy was set to contract by 6% more than forecast by the end of 2021. The quarterly outperformance is attributed to both the fund being tilted towards small companies (which outperformed large companies) and very strong stock selection in our small-cap names.

The key sector contributors were IT and healthcare with PDF and e-signature software company Nitro Software appreciating +88% while sales enablement software-as-a-service company Bigtincan was up 82%. Other good contributors included educational technology company 3PL, the owner of Mathletics, which appreciated +55% benefiting from a takeover offer.