ESG options outperform in the short term: Research

Investment options managed according to socially responsible, ethical or sustainability principles tend to outperform in the short-term, new superannuation research shows.

Rainmaker's latest Roundup report, which analysed 139 multi-manager, strategic investment options offered by super funds, found Equip's MyFuture Sustainable Responsible Investments (14.1%) topped the 12-month performance table to May 2019, as well as the three-year period (11.9%).

Over the short term, Australian Ethical's Super Employer - Advocacy (12%), Media Super's Sustainable Future Shares (11.5%), Australian Ethical Super Employer's Growth (10.3%) and First State Super Employer's Australian Socially Responsible Equities (10.2%) performed strongly.

However, ESG options tend to underperform over three and five-year periods, Rainmaker said, noting the gap was only 20 and 30 basis points respectively.

Over 10 years, the best-performing funds were: HESTA - Eco-Pool (10.3%), UniSuper Sustainable High Growth (9.8%), Media Super - Sustainable Future Shares (9.1%), AMP SignatureSuper - Responsible Investment Leaders International Share (8.6%) and UniSuper - Sustainable Balanced 8.7%.

The analysis also found that Australia is one of the most active ESG supporters in terms of adopting United Nations Principles for Responsible Investment (UNPRI) principles.

Australia is ranked fourth across the world with 141 signatories: 95 investment managers, 36 asset owners and 10 service providers.

The largest super fund signatories are AustralianSuper, NSW State Trustees, AMP group, CFS group and BT Financial Group.

AMP Capital, Macquarie, IFM Investors, BlackRock and Colonial First State Global Asset Management represent the largest investment managers backing the principles.

Read more: Australian EthicalMedia SuperRainmakerAMP CapitalAustralianSuperBlackRockBT Financial GroupFirst State Super EmployerUnited Nations
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