30 September 2019

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 generate an income stream consistent with prevailing short-term interest rates while minimising the risk of capital loss and supporting the Australian Ethical Charter.

Investment strategy

The opportunity to invest in a diversified portfolio of interest-bearing investments generating income. The Fund is invested in short-dated deposits, high grade mortgage-backed securities, State and Commonwealth Government Bonds, and bank and other corporate bonds. As such, the returns of the Fund tend to move in line with the general level of interest rates.

Performance

ResetPerformance line chart
~Powered by data from FE~

Annualised performance

1m3m6m1y3y5y10ySince inception
Fund0.1%0.4%0.9%2.1%2.1%--2.1%
Benchmark0.1%0.3%0.6%1.6%1.8%--1.9%

Calendar performance

CY 2018CY 2017CY 2016CY 2015CY 2014
Fund1.9%2.2%2.2%--
Benchmark2.0%1.8%2.0%--

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‚Äźcarbon 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
%
Australian Government Bond
11.1%
Westpac Banking Corporation
8.0%
Western Australia Treasury Corporation
7.9%
National Australia Bank Limited
7.3%
Queensland Treasury Corporation
6.9%
New South Wales Treasury Corporation
5.3%
Treasury Corporation of Victoria
5.3%
Suncorp Metway Ltd
4.9%
Bank of Queensland
4.5%
Bendigo and Adelaide Bank Limited
4.2%

Commentary

The Australian Ethical Income Fund returned 0.3% (0.4% for the wholesale fund) for the September quarter, approximately in line with the benchmark which returned 0.3% for the quarter.

As has been the theme over 2019, the benchmark rate has continued to decline and fell from 1.20% at the end of June to 0.95% at the end of September. Fixed rate securities in the fund, purchased with up to 12 months to maturity, saw the fund benefit from these declines.

The decline in the 90-day bills rate comes as markets expect the Reserve Bank to continue to loosen monetary policy to support the economy. With a rate cut delivered in July, the unemployment rate moving higher and a very low level of GDP growth for the year to June reported over the quarter, there is little reason to doubt short-term rates will continue to move lower in the near term.

The fund continues to preference high-quality liquid assets, with the top 10 securities dominated by State and Commonwealth Government issues with up to 12 months to maturity. Bank positions held consist of a combination of floating rate notes, short-dated discount securities and term deposits.