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 exposure to primarily Australian fixed interest securities that support the Australian Ethical Charter, generating income with some capital growth potential over the medium to long term.

Investment strategy

The opportunity to invest in a diversified portfolio of interest-bearing investments generating income. The Fund is invested in primarily fixed rate bonds, from issuers such as the Commonwealth and State Governments, banks and other corporate issuers that meet the Australian Ethical Charter.

Performance

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Annualised performance

1m3m6m1y3y5y10ySince inception
Fund1.0%0.9%1.3%2.9%5.5%4.0%-4.7%
Benchmark1.1%1.0%1.6%3.2%6.0%4.5%-5.2%

Calendar performance

CY 2019CY 2018CY 2017CY 2016CY 2015
Fund6.7%4.0%3.2%2.1%2.1%
Benchmark7.3%4.5%3.7%2.9%2.6%

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
%
Government of Australia
56.3%
Queensland Treasury Corp.
7.5%
New South Wales Treasury Corp.
5.6%
Treasury Corporation of Victoria
4.9%
Western Australian Treasury Corp.
3.3%
South Australian Government Financing Authority
1.7%
European Investment Bank
1.2%
International Bank for Reconstruction & Development
1.2%
Rentenbank
1.2%
International Finance Corporation
1.1%

Commentary

The Fixed Interest Fund performed slightly behind the benchmark index after fees over the September quarter, rising 0.8% (0.9% Wholesale Fund) against the 1.02% return of the Bloomberg Ausbond Composite Bond Index.

In the wake of the economic disruptions caused by COVID-19, the performance of fixed income has been determined by the capacity and outlook for central banks and governments to continue to provide support.

Over the September quarter both the Governor and Deputy Governor of the Reserve Bank of Australia (RBA) have suggested that a further small cut to the official cash rate may yet be in the RBA’s toolkit. Towards the end of the quarter markets had begun to price in expectations that this cut would be applied to the cash rate, the target rate for 3-year government bonds under yield curve control operations and the rate at which funding is made available to banks under the Term Funding Facility.

The Fixed Interest Fund retained its neutral duration position throughout the quarter, delivering in-line performance before fees.