This range of options enables the construction of truly diversified portfolios that both manage the risk and offer the potential for competitive returns.
Evidence backs this up. The average ethical and sustainable global equity fund has outperformed the IA (Investment Association) Global average in all but one of the last five years, and delivered a particularly strong performance through 2019.
Even though some of the environmentally focused funds struggled in relative terms, 65% of ethical and sustainable global funds outperformed the sector average in the year to 31 July 2019.
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.