Sustainable investments consistent in volatile markets

In volatile market conditions the median Sustainable Responsible Investment (SRI) fund has outperformed the S&P/ ASX 200 over one, two, three and five years, according to the latest SRI Median Report from AMP Capital Investors.

The report, by Director of Sustainable Funds Michael Anderson and Investment Specialist Angus Dennis, examines the median returns of all 12 Australian SRI funds in the periods to 30 June 2008.

The SRI Median results for wholesale and retail investment managers are compared to the returns of the S&P/ASX 200, in addition to the performance of the Growth, Value and Small Companies indices. The results to 30 June 2008 showed the SRI median delivered -13.35% over one year, 5.76% over two years and 11.72% and 16.39% over three and five years respectively.

Angus Dennis said the period was characterised by negative and subdued returns, reflecting the impact of the global credit crisis and slowing economic conditions.

“Although still outperforming, the size of relative outperformance has been impacted in the last year in part by the poorer relative returns of small companies which SRI managers tend to be overweight,” he said.

Michael Anderson said the small companies position was due to a combination of negative exclusions of certain large companies such as gambling stocks, along with the targeting of more sustainable industries, which often include companies with smaller market capitalisation.

The SRI Median Report also looked at comparable risk levels for sustainable funds relative to other investment styles. The report found that the SRI Median risk level remained well below measures for the Small Companies and Growth indices.

The findings are consistent with previous AMP Capital research which shows that companies that manage social and environmental issues well are more likely to deliver better financial performance.

Find out more about the AMP Capital Sustainable Share Fund.