ESG wholesale managed funds outperform

Published on
October 29, 2020
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ESG wholesale managed funds outperform

ESG-aligned wholesale managed funds continue to outperform in the managed funds market, reveals latest research from Rainmaker Information.

They outperformed in all Australian sectors and deliveredthird-in-class returns for the three years to August 2020,according to Rainmaker's latest WholesaleManaged Funds Report for August 2020.

Large cap international equites topped the sectors with a medianreturn of 10.2% p.a., followed by the growth asset sectordelivering a median return of 7.0% p.a.

Australian equities sectors struggled relative tointernationals, with the income focused and small cap Australianequities managed funds the worst performing.

Interestingly, both Australian and international large capsectors were strong through the three years to August.

"Even though stock markets were at record highs, morethan three-quarters of Russell 3000 stocks were still below their52-week highs," said John Dyall, head of investment researchat Rainmaker Information.

The top performing individual product was the Lakehouse SmallCompanies Fund that delivered a return of 29% p.a. for the threeyears to August 2020.

Rounding out the top three performing funds were the Loftus PeakGlobal Disruption Fund and BetaShares Global sustainability LeadersETF, each producing returns of 24.2% p.a. and 23.5% p.a.respectively for the three-year period.

The ESG sector emerged as the third best performing sector witha median return of 6.3% p.a. across the three years with theBetaShares Global Sustainability Leaders ETF well placed among thetop performing products overall.

"Driving the returns was the unusually high contributionfrom large cap stocks," said Dyall.

"The top 10 contributors have been more influential inthe past 12 months than they have been in the past 10years," said Dyall.

ESG investment options continues to dominate the performanceconversation among the Australian wealth management industry, withAustralian Ethical offering the best performing superannuationproduct across the three years to end August 2020 and ESGETPs' funds under management eclipsing the $1.8 billion markin June 2020.

There is clearly a thirst by investors to align themselves withcompanies that follow ESG principles either directly orindirectly.

The top performing products across each wholesale managed fundasset sector for the three years to August 2020 are listedbelow:

Sector Top performing products Three year performance
(%p.a.)
Sector Median
(%p.a.)
Australian Equities Small Cap Lakehouse Small Companies Fund 29.0% 8.9%
International Equites Large Cap Loftus Peak Global Disruption Fund 24.2% 10.2%
ESG BetaShares Global Sustainability Leaders ETF 23.5% 6.3%
Australian Equites Large Cap Australian Unity Platypus Australian Equities 17.3% 5.6%
Combined Property Australian Unity Diversified Property 14.6% 3.0%
International Equities Emerging Markets Fidelity Global Emerging Markets Fund 13.1% 5.1%
Australian Equities Income Focused Plato Australian Shares Income Fund 8.5% 0.8%
Growth IOOF MultiMix Growth Trust 8.4% 7.0%
Balanced Macquarie Balanced Growth Fund 7.9% 5.6%
Dynamic Asset Allocation Legg Mason Martin Currie Tactical Allocation Fund 7.1% 3.4%
Capital Stable Macquarie Capital Stable Fund 6.7% 4.0%
Credit Principal Global Credit Opportunities Fund 6.6% 3.8%
Australian Fixed Income Ardea Real Outcome Fund 6.2% 5.6%
International Fixed Income Schroder Fixed Income Fund 6.2% 4.1%
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