The £189.2m fund is the only ethical fund to deliver top-quartile performance over both five year periods. It has also outperformed its peer group, the IMA Global sector, over both terms.
Over the 10 year period, the fund has returned 195.54 per cent, compared with a sector average of 106.52 per cent, according to FE Analytics.
Performance of fund vs sector and index
Source: FE Analytics
The fund has achieved its consistent performance while also being one of the least volatile ethical and Global portfolios.
It has achieved a Sharpe ratio of 0.53 over the past decade, the highest of any ethical fund, indicating it has delivered the greatest risk-adjusted returns over the period.
The ratio measures the fund’s return relative to a notional risk-free investment – in this case, cash. The difference in returns is then divided by the fund’s volatility.
Over the period, the Ecclesiastical fund has also topped the tables in terms of Alpha, or the extra returns it makes over the performance of the market it invests in.
Other notable funds which have outperformed the peer group include the Kames Ethical Equity and Standard Life UK Ethical funds, as well as lesser-known CIS Sustainable Leaders Trust managed by FE Alpha Manager Mike Fox.
Outperforming ethical funds
| Name | 2002-2007 (%) | 2007-2012 (%) | IMA Sector |
| Ecclesiastical Amity International | 145.49 | 16.21 | Global |
| Kames Ethical Equity | 155.18 | 8.71 | UK All Companies |
| CIS Sustainable Leaders Trust | 136.65 | 4.32 | UK All Companies |
| Standard Life UK Ethical | 131.21 | 5.49 | UK All Companies |
| Aberdeen Ethical World | 106.32 | 10.06 | Global |
Source: FE Analytics
The Ecclesiastical fund’s recent outperformance can partially be attributed to FE Alpha Manager Robin Hepworth’s bullish view of emerging markets.
The manager, who has been running the Ecclesiastical vehicle since 1999, recently reduced his exposure to western economies in favour of faster growing emerging markets such as Asia.
The fund’s highest regional allocation is now in Asian stocks, with nearly 30 per cent of the portfolio invested in Asian markets. It is also tilted toward financial stocks, with nearly 20 per cent of the fund invested in the sector.
Amongst the fund’s top holdings are Singapore-listed shipping company Ezion and Brazilian oil and gas conglomerate Petroleo Brasileiro Petrobras, as well as more well-known blue-chip names such as GlaxoSmithKline and Vodafone.
The fund has a minimum investment of £200 and a minimum top up of £200. The fund’s annual management charge is 1.5 per cent and carries a TER of 1.58 per cent.
Juliet Schooling Latter (pictured), head of research at Chelsea Financial Services, says ethical funds are difficult to recommend because there is a great deal of scepticism in the investment community.
She says investors often mistake whether a fund is ‘ethical’ or ‘green’ and discount the fund as a place to put their money.
“There’s a slight confusion in investing over whether something is green or ethical and they quite often get lumped together,” she said. “Most funds do both and obviously that cuts out a number of different sectors and that can be the difficulty."
“There are some ethical funds out there that are better than others, but it is slightly tricky because they have some sectors [such as mining] that they can’t access so they will likely underperform at some point in the investment cycle.”
This article was written in collaboration with and is sponsored by Ecclesiastical Investment Management.