Find out how our UK Ethical Fund is performing

Photo of Gareth Trainor Head of Investment governance UK Ethical Fund

Investing

Gareth Trainor

23rd October 2015 at 9:01am

As part of Good Money Week, Gareth Trainor talks about the consistently good performance of our UK Ethical Fund and how ethical investors help shape the approach. 

Find out how our UK Ethical Fund is performing

Video Transcript

This is the Standard Life Fund Governance review of the Standard Life SLI UK Ethical Fund as at October 2015.

The fund aim and objectives

This fund invests in UK equities. And while the fund manager excludes companies that don’t meet strict screening requirements, she also includes those that provide a positive contribution to society – an approach overseen by Standard Life’s Ethical Funds Advisory Group.

In contrast to some funds of an ethical type, this fund continues to evolve its approach based on Standard Life Investments’ annual review of ethical investor sentiment – which has been running for over 10 years. By actively asking its investors’ opinions, Standard Life Investments tries to ensure that what matters most to their customers is at the forefront of its ethical strategies.

Interestingly, the 2015 survey shows seven of the top 10 priorities for their ethical investors are positive criteria. In particular, investors deem high standards of business ethics and human rights to be the most important criteria.

How it invests

The fund manager applies Standard Life Investments’ in-house ‘focus on change’ approach. Picking the right companies to invest in would seem to be a real strength of the manager, and this comes through in the performance. There is definitely a bias to medium-sized companies, which has been present across the last decade, and this has been good for performance.

Fund information table

Performance:

The performance of the fund has been consistently good for some time. Over the last one, three, five, and 10 years, it beat its target, the Morningstar ethical sub-sector, considerably. If we look at the last 10 years, this has seen investors doubling their money with a 115% return – outperforming the benchmark by over 31%.

Fund performance

Source: Morningstar, as at 30 September 2015. All returns are percentage growth and have been calculated on a total return basis, gross of dividend tax and after charges. ‘IA Ethical Sector UK All Cap’ represents the peer group of all UK equity funds within the Investment Association UK All Companies sector with the ‘Ethical Issue Strategy flag’ applied.

Risk levels:

The risk taken is reasonable for an active manager. It’s worth bearing in mind that if medium-sized companies, or sectors that the ethical criteria favour are particularly volatile for a period, it is likely this fund will be volatile as well.

Overall governance rating: GREEN

We have no concerns about this fund. The fund is doing exactly what it’s supposed to.

Performance is very good over a long period of time – outperforming the wider market by some margin. Our review highlights a fund with very good long- and short-term performance, with a significant proportion of that coming from good active fund management.

Residual concerns and actions: NONE

If you want to know more about this fund you’ll find links to the pension and ISA factsheets below.

And you can read about Standard Life Investments’ ethical resource and criteria – as well as about our full range of values-based investing funds – in our new guide.

If you find this review useful, please let us know by leaving a comment.

Find out more

You can find out more about the SL SLI UK Ethical Fund in the pension and ISA factsheets.

Read about our full range of values-based investment funds in our new guide.

Appendix – evidence

Performance

Evidence extracted from Morningstar system by Fund Governance team, Standard Life. See Stephen Sullivan / Steven Millar for further details:

Factsheet link:

http://uk.standardlifeinvestments.com/ifa/O_M_UK_Ethical/getLatest.pdf

This blog and any responses to comments are not financial advice. As with any investment the value of your investment can go up or down and may be worth less than what was paid in. The information here is based on our understanding in October 2015.

For more information about how to take steps to connect your values with your money, visit standardlife.co.uk for our Ethical Investments Hub page where you can find our consumer guide on values-based investing.

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