This range of options enables the construction of truly diversified portfolios that both manage the risk and offer the potential for competitive returns.
The evidence backs this up. The average ethical and sustainable global equity fund has outperformed the sector average in 4 out of the last 6 years, with a cumulative outperformance over the last 5 years. Returns were particularly strong in relative terms in 2020, a year when COVID 19 highlighted the need to address the sort of long-term global challenges that sustainable funds seek to address.
This is not so surprising as these funds are often focused on providing solutions to social and environmental challenges, rather than just avoiding controversial sectors. This means that they benefit from long-term economic tailwinds and avoid many of the headwinds faced by less progressive companies. These funds are not just good for the planet, but make good investments.