Ethical investment funds locally and in New Zealand grew in size and delivered strong returns over 2012, while responsible investing was now "mainstream" according to the latest industry benchmark report.
Funds in responsible investment portfolios in Australia totalled $152 billion or 16 per cent of total assets under management (TAUM) at the end of last year, according to the 2013 Responsible Investment Benchmark Report produced by the Responsible Investment Association Australasia.
This included all ethical and socially responsible funds (10 per cent), as well as the funds managed under ESG integration (89 per cent of the total) that are rated as above average.
The figure was an increase on last year when total managed funds of $117 billion represented 13 per cent of the total.
In New Zealand responsibly invested funds totalled NZ$22.6 billion, a growth of 17 per cent over a year. This represented "a massive" 38 per cent of total asset under management across the country.
Simon O’Connor RIAA chief executive said the "strong outperformance of ethical and responsible investment funds should finally put to bed the myth that a more responsible approach to investing leads to lower returns.”
The 2012 average returns for responsible investment funds (Australian equities) was 21.45 per cent.
The 5-year (post-GFC) ethical investment fund returns post-GFC were stronger in all responsible fund categories compared with the benchmark and average mainstream funds, the report found.
The report also highlighted the growth in responsible banking, impact investment and community finance.
“With eight of the top ten investment managers in Australia having now declared themselves responsible investors by signing on to the UN Principles for Responsible Investment, it would be fair to say that responsible investment has become mainstream,” O’Connor said.