A Level Playing Field: when investing ethically doesn’t mean lower performance
What if we compared two widely available managed funds – one ethically screened, the other with no screening. Would you expect the ‘ethical’ fund to have lower returns? Here’s an example - BT Investment Management’s Ethical Share Trust vs Core Australian Share Trust (Wholesale funds):
- Ethical Share Trust 7 year Performance: 11.2% p.a.
- Core Australian Share Trust 7 year Performance: 11.0% p.a.
(as at 31.01.11)
So now that we have taken the question of lower performance out of the equation, we have a level playing field to ask the question: do you want to profit from alcohol, cigarettes, gambling, armaments and other ‘sin’ stocks?
BT Investment Management’s ethical screens constitute ‘zero tolerance’ to companies generating operating revenue from industries considered to be unethical or socially irresponsible – in this case those involved in alcohol production, tobacco manufacture, weapons manufacture, gaming manufacturers and providers of gaming facilities, companies convicted of environmental offences, and companies breaching human rights.
These exclusions apply only to manufacturers/ producers and not to retailers of any of the subsequent by-products. It is important to note that uranium is also included in the negative screening but is not a ‘zero tolerance’ policy. The Manager also applies a positive screen to promote companies engaged in sustainable practices into the Fund. This may include companies involved in renewable energy, ecotourism or sustainable agribusiness. The portfolio is constructed leveraging the same research platform underpinning BT Investment Management’s range of Australian equity funds (Source: Lonsec 2011).
