Active ethical global equity fund returns beat passive during COVID-19
Active ethical/sustainable global equity funds have beaten their passive counterparts during the COVID-19 pandemic but one passive fund stood out when it came to a longer time period, according to data.
According to FE Analytics, there were 27 active ethical/sustainable global equity funds compared to seven passive funds in the Australian Core Strategies universe.
When all 34 funds were considered, four of the top five performing funds were active funds since the start of 2020 to 30 September, 2020.
Since the start of the year the active ethical/sustainable global equity funds have returned between a range of 44.35% and a loss of 8.85%. However, almost half of those funds did not make a return.
On the passive side the return range was between 17.5% and a loss of 4.14%. Of which only one fund made a loss.
The top-performing funds were CFS Baillie Gifford Global Stewardship A at 44.35%, followed by BetaShares Global Sustainability Leaders ETF (17.5%), AtlasTrend Clean Disruption (16.2%), and Pengana International Ethical (9.7%). This was compared to the global equity sector average of a loss of 0.99%.
Top five ethical/sustainable global equity funds since start of 2020 to 30 September 2020
Source: FE Analytics
The Baillie Gifford fund had its largest stock holdings in Tesla (6.2%), JD.com (1.56%), Shopify (1.39%), Amazon (1.33%), and Wayfair (1.2%), according to its latest factsheet.
However, over the longer term, two passive funds made it into the top five with the BetaShares fund returning significantly higher than its active counterparts to top the charts. Over the three years to 30 September, 2020, the fund returned 83.69%.
This was followed by Macquarie Walter Scott Global Equity (51.99%), CFS Generation Wholesale Global Share (48.35%), Pengana High Conviction Equities (41.27%), and passive fund State Street Climate ESG International Equity (40.7%).
The global equity sector average return at this time was 29.55%.
Top five ethical/sustainable global equity funds over the three years to 30 September 2020
Source: FE Analytics
The BetaShares fund tracked the performance of the NASDAQ Future Global Sustainability Leaders index that provided exposure to 200 large global stocks which were climate change leaders.
According to its latest factsheet, the fund had its largest sector weighting towards IT (38.7%), healthcare (15%), consumer discretionary (14.8%), financials (13.9%), and communication services (6.4%).
Its highest stock exposures were to Apple (5.3%), NVIDIA Corp (4.9%), Mastercard (4.1%), Visa (3.6%), and Home Depot (3.6%).
When it came to the five years to 30 September, 2020, there was only one passive fund that had five year returns. The fund, UBS IQ MSCI World ex Australia Ethical ETF, returned 54.7%. This was not enough to beat its top five active counterparts that returned between 159.8% and 62.6%.
These funds were Pengana High Conviction Equities (159.8%), CFS Generation Wholesale Global Share (99.49%), Macquarie Walter Scott Global Equity (75.83%), CFS Stewart Investors Wholesale Worldwide Sustainability (64.78%), and AXA IM Sustainable Equity (62.6%).
The global equity sector average over the five years was 52.53%.
Four out of the five largest holdings of the Pengana fund were healthcare stocks including Bavarian Nordic, Bio-Rad Laboratories, Photocure, and Telix Pharmaceuticals.
Top five ethical/sustainable global equity funds over the five years to 30 September 2020
Source: FE Analytics
Recommended for you
Outflows from an Australian private markets fund manager have caused FUM at Pacific Current to decline by $1 billion in the last quarter.
Former RIAA chief executive Simon O’Connor has joined the ethical advisory panel at U Ethical Investors.
Financial services leaders are “all cashed up with nowhere to grow” when it comes to M&A activity, according to Deloitte, with 90 per cent saying they have strong balance sheets ready for an acquisition.
As fund managers are urged to diversify their product ranges, they are finding a faster way to do this is via an acquisition of existing firms but experts say it is not without potential culture clashes.
