ESG investment options competitive, finds SuperRatings

Environmental, Social and Governance (ESG) investment options, superannuation, SuperRatingsAn annual survey of Environmental, Social and Governance (ESG) superannuation investment options by independent research company SuperRatings has found “competitive performance” compared to mainstream investment options.

SuperRatings found that ESG balanced funds returned a median of 11.9% in the 12 months to April 2015, compared to 12.0% for the broader SuperRatings SR50 Balanced Index.

Investment options for ESG Australian shares outperformed normal Australian share options, with a median return of 10.5% compared to 9.5% in the year to April 2015.

“The performance data clearly shows responsible investment options remain competitive with mainstream superannuation investment options,” said SuperRatings CEO Adam Gee.

“This should help provide members and fund managers with confidence when considering Environmental, Social and Governance issues in their investment mix and in the way the funds manage their own operations,” he said.

SuperRatings found that ESG Balanced and Australian share options outperformed mainstream investment options over the past three years, but underperformed over the last five years.

SuperRatings also found that choosing ESG investment options does not necessarily mean higher costs.

“The average fee among the 2015 Infinity Recognised funds was $550 for a balanced option with a $50,000 account balance. This is materially less than the average $667 for all balanced superannuation funds,” said SuperRatings.

“When looking at the costs of these funds, evidence shows that choosing a fund with strong sustainability credentials does not necessarily mean paying higher fees.’’ Mr Gee said.

Mr Gee foresees increasing importance for ESG investing in the future, both among fund members and managers.

“Social responsibility, environmental issues and sustainable investing are common and popular themes for investors, including superannuation members. As the retirement savings system continues to mature and as people become more engaged with their superannuation, we expect an even greater focus on sustainability,” he said.

“This philosophy sits very comfortably with the long term nature of superannuation investments,” he said.

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