Ethical funds struggle in recession

Ethical investment funds have lagged behind the performance of conventional funds over the past 12 months, falling by an average of 16.7%

Only three out of 60 ethical funds posted a positive return in the past year, research by Investment Life and Pensions Moneyfacts discovered.

Looking back over three years presents an equally gloomy picture, with ethical funds dropping in value by an average of 16.4%, compared to a shortfall of 9.2% on conventional funds.

The long term picture is not quite so disappointing, but is still negative, with ethical funds losing 4.3% over the past ten years, compared to 26.7% gains on non-ethical funds.

Richard Eagling, editor of Investment Life and Pensions Moneyfacts, said: “Just two years ago, the defence for ethical fund performance was strong, with returns outstripping those of their non-ethical rivals.

“Unfortunately, the performance of ethical funds is now lagging behind that of their non-ethical counterparts.”

However, he added that the long term future for ethical investments “remains positive”.

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