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 investors with a balance between capital growth and a moderate level of income through a diversified portfolio of assets that supports the Australian Ethical Charter.

Investment strategy

The opportunity to invest in a diversified portfolio of asset types and markets to reduce the volatility of returns. Asset classes include Australian and international shares, property and fixed income securities.

Performance

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Annualised performance

1m3m6m1y3y5y10ySince inception
Fund-0.5%2.0%9.2%0.6%6.5%6.4%7.0%6.6%
Benchmark-1.0%1.2%7.8%-1.3%6.5%7.0%8.1%7.3%

Calendar performance

CY 2019CY 2018CY 2017CY 2016CY 2015
Fund17.3%-0.8%8.1%4.2%6.9%
Benchmark17.4%1.2%8.9%6.3%7.4%

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
%
INVESTA PROPERTY GROUP
4.8%
HEALTHCARE WHOLESALE PROPERTY FUND - ORDINARY UNITS
3.9%
MICROSOFT CORP
1.2%
AUSTRALIAN GOVERNMENT 5-75 15/05/2021
1.1%
WESTPAC BANKING CORPORATION ORD F/PD SHARES
0.8%
NATIONAL AUSTRALIA BANK
0.8%
CONTACT ENERGY LTD
0.8%
ALPHABET INC-CL A
0.8%
AUSTRALIAN GOVERNMENT 4-25 21/04/2026
0.7%
AUSTRALIAN GOVERNMENT 2-5 SER 155 21/05/2030
0.7%

Commentary

The Balanced Fund returned 2% over the quarter (2.2% Wholesale Fund). The fund outperformed its strategic asset allocation weighted benchmark by 1.3%. Markets posted mixed results over the September quarter. The MSCI World Index returned 6.8%, largely driven by the US where the S&P 500 increased 8.5%. The strong performance throughout July and August followed better-than-expected jobs data and optimism about the prospect of a COVID-19 vaccine. However, this was partially offset in September, which saw the index (S&P 500) decline by 3.8% following a pullback in US tech stocks with the likes of Apple, Facebook and Alphabet falling by more than 10%. There were mixed results across Asia and Europe, with Japan’s Nikkei 225 Index up 4.7%, Hong Kong’s Hang Seng Index down -2.6%, the UK’s FTSE 100 down -4.0% and the rest of Europe (MSCI Europe ex UK) up 1.8%.

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, ending the quarter down 0.44%.

The domestic equities portfolio was the biggest contributor, delivering 4.2% over the quarter. This was driven by the IT sector which was the top performer, and in which the fund holds an overweight position. Healthcare was another large contributor to both relative and absolute performance due to stock selection (in particular, Healius which returned 17.7% and Cogstate which returned 97.2%).