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Non-ethical funds beat ethical counterparts in 2021

Non-ethical funds beat ethical counterparts in 2021

Non-ethical funds performed better than their ethical counterparts in 2021, returning 6.06 per cent over the year.

This is compared to ethical funds, which saw returns of 3.97 per cent in 2021, according to Moneyfacts.

However, over a three, five and 10-year period, ethical funds continue to beat the performance of non-ethical funds. 

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When broken out into IA sectors, non-ethical UK all companies funds were the highest performing in the 12 months to the end of December, rewarding investors with a 14.23 per cent return. This beat the ethical equivalent sector by just under six percentage points.

However, ethical corporate bond funds outperformed their non-ethical equivalents, showing a -2.99 per cent and -3.93 per cent return respectively.

Ethical vs non-ethical funds performance

 

1 year

3 years

5 years

10 years

15 years

All ethical funds

3.97%

32.63%

47.51%

146.40%

188.34%

All non-ethical funds

6.06%

25.05%

34.20%

114.30%

156.00%

IA sector performances

   

Ethical £ Corporate Bond funds

-2.99%

8.64%

14.93%

56.14%

86.31%

Non-ethical £ Corporate Bond funds

-3.93%

11.10%

17.06%

66.61%

103.51%

Ethical Mixed Investment 40-85% funds

5.40%

32.06%

49.42%

121.41%

211.67%

Non-ethical Mixed Investment 40-85% funds

6.50%

24.99%

32.14%

97.72%

127.42%

Ethical Global funds

2.57%

53.45%

80.00%

184.18%

209.65%

Non-ethical Global funds

9.54%

42.45%

56.77

200.02%

241.73%

Ethical UK All Companies funds

8.58%

24.88%

36.67%

115.23%

131.50%

Non-ethical UK All Companies funds

14.23%

25.12%

33.02%

109.94%

122.16%

Source: Moneyfacts

Rachel Springall, finance expert at Moneyfacts, said it’s worth keeping in mind that ethical funds have outperformed non-ethical funds overall during previous years.

“Fund past performance cannot of course guarantee future growth, and as 2022 has already demonstrated its potential for stock market volatility, it will be interesting to see how funds will perform moving forward,” she added.

She said given the uncertainty in the stock market, investors would be wise to seek advice before switching out of any fund sector, as a “jumpy premature move” may results in missing out on potential recovery.

“Good advice is essential to any investor to get some peace of mind, particularly at a time when the markets are volatile.”

sally.hickey@ft.com