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Responsible managers claim a win

“Ethical” KiwiSaver funds are outperforming their mainstream competitors through Covid-19 market disruption, a responsible investment platform says.

Tuesday, April 21st 2020, 6:44AM

Barry Coates, Founder and CEO Mindful Money

Mindful Money chief executive and founder Barry Coates said funds that his platform classed as “mindful” outperformed in all risk categories in the first quarter of this year.

On average, KiwiSaver funds fell 2.1% in the quarter but mindful funds fell 1.8%. On average, balanced funds were down 8.9% but mindful options dropped 6.9%. Growth funds were down 12.4% on average but only 7.8% if they were mindful.

CareSaver outperformed the average by 4.9% across all three main risk categories.

Booster outperformed the balanced fund average by 2.9% and the growth fund average by 2.7%.

Simplicity outperformed the average in each of the three main risk categories. Amanah’s growth fund, which avoids investments that are not in line with Islam, had a return of 5.4% compared to an average loss of 12.4%.

Globally, Dan Lefkovitz, strategist for Morningstar Indexes found 20 of the 21 members of the Morningstar Sustainability Index Family, which is methodologically aligned with the Morningstar Sustainability Rating for funds, lost less than their broad market equivalent.

The Morningstar Global Markets Sustainability Index fell roughly 8% in the first quarter, outperforming the global broad market index by 1.5%.

The Morningstar Australia Sustainability Index lost 22%, more than one percentage point better than the broad Australian equity market. 

“As investors of all kinds increasingly think about ESG factors as risk factors, the relative resilience of Morningstar’s ESG-screened indexes in first-quarter 2020 offers a proof point that ESG investing is not just about values.”

Mindful Money’s founder and chief executive Barry Coates said: “Investors are always looking for an X-factor, especially now that they are losing money from their hard-earned savings. These results show that ethical funds have been resilient during the Covid-19 crisis so far. The companies that manage their environmental, social and governance risks have had lower financial losses, and even some gains, in the financial downturn.

“KiwiSaver investors need to ensure they are making the right ethical choices, as well as being in the right risk category. This analysis of quarterly results shows that being ethical doesn’t mean a financial cost – in fact, it shows that investors can have both good financial returns and do good for the environment, the climate and people.”

David Beattie, principal at Booster, said its responsible investment portfolios were already outperforming before Covid-19 hit, driven by fossil fuel exclusions.

“During this latest quarter, we have seen further significant falls in the price of oil and the share prices of companies involved directly in fossil fuel industries. Our active management strategies have also come into their own, as we expected during a market downturn, and our unlisted investments in the NZ horticulture space are significant strategic risk and return diversifiers.”

Tags: Booster Caresaver ESG KiwiSaver Mindful Money responsible investing Simplicity

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Last updated: 11 August 2020 8:24am

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