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 through investment in international companies which meet the Australian Ethical Charter.

Investment strategy

The opportunity to invest in a diversified portfolio of companies listed on international stock exchanges, which meet the Australian Ethical Charter.

Performance

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Annualised performance

1m3m6m1y3y5y10ySince inception
Fund-0.4%1.8%7.1%-0.1%7.6%7.6%7.9%2.9%
Benchmark-0.3%3.8%9.9%4.3%11.2%10.4%13.0%6.6%

Calendar performance

CY 2019CY 2018CY 2017CY 2016CY 2015
Fund27.4%-3.0%12.5%2.9%13.3%
Benchmark28.0%1.5%13.4%5.9%11.5%

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
%
MICROSOFT CORP
4.5%
ALPHABET INC-CL A
3.0%
VISA INCORPORATED CLASS A SHARES
2.3%
AT&T INC
1.9%
FACEBOOK INC-A
1.8%
MASTERCARD INC CLASS A
1.4%
ADOBE INC
1.4%
ACCENTURE PLC
1.4%
AMGEN INC
1.4%
NVIDIA CORPORATION
1.3%

Commentary

The International Shares Fund increased 1.8% (2.1% Wholesale Fund) over the September quarter versus it benchmark (MSCI ex Australia) which increased 3.78%, resulting in underperformance of 1.9% (1.7% Wholesale Fund). The good performance of the overall global markets was driven by the very strong performance of the US, where the S&P 500 increased 8.5% and the Nasdaq increased 11%. In August the US indices broke record highs due to resilient company earnings, a shift in the Federal Reserve approach to monetary policy and optimism about a vaccine. As the Fund is underweight the US market (62% versus benchmark of 68%) it contributed to the underperformance.

The two sectors which contributed positively to the Fund’s performance were Energy and Utilities. The Fund is underweight Energy (the sector declined as the oil price decreased in September) due to our ethical selection criteria, which provided a positive contribution as the sector underperformed. Stock selection in Utilities contributed to the positive performance. The two sectors which detracted from performance were IT and Communication Services, both of which the Fund is overweight. Both IT and Communication Services provided positive returns, but relative to the benchmark the sectors underperformed due to stock selection. In the IT sector the Fund underperformed by 1.53%, with 0.88% of the underperformance attributable to the Fund not holding Apple due to our ethical selection criteria. The other negative contributor was Consumer Discretionary, a sector which the Fund is underweight. The largest stock in this sector is Amazon which the Fund does not hold, contributing an underperformance of 0.28% of the overall underperformance.