Australian Ethical’s Balanced superannuation product’s fund size has jumped 45% ($380 million) to $1.23 billion over the last calendar year, suggesting a surge in responsible investment interest.
Since the bushfire season exacerbated in September, 2019, the fund size increased by $90.6 million, according to FE Analytics.
The data also found that over the year to 31 December, 2019, the fund returned 16.76%, beating the mixed asset – balanced sector average of 12.03%.
Australian Ethical chief customer officer, Allyson Lowbridge, said the jump in fund size suggest that market sentiment was shifting and driving positive action.
“There is a growing movement of people who increasingly understand the power of money to do good in the world. They’re connecting the climate disaster with human-induced carbon emissions and deciding to take action,” she said.
“And while there are large and small actions they can take, one of the most impactful is where they invest their money. They’re realising that they can make their money matter by investing in a liveable, equitable future for everyone by investing ethically and responsibly.”
Since bushfire activity increased around September, the fund’s size grew $129 million.
Lowbridge noted the bushfire activity could have contributed to the increased fund size.
“As environmental and social concerns escalate, money is flowing into green finance at record rates with people seeking us out as having the deepest ethical conviction of any fund,” she said.
“The recent bushfires are a devastating reminder that we can no longer think of climate change as affecting our far-off descendants; it’s a reality and it’s impacting everyone.
“And while we can’t say definitively that the bushfires are directly driving our fund growth, we can only assume that the climate emergency already on our doorstep is encouraging Australians to make their money matter by investing in solutions like Australian Ethical.”
In terms of Australian Ethical’s MySuper product, Lowbridge said the fund was seeing more employers choosing it as the default fund, especially as companies introduced improved sustainability practices in the workplace and for employees.
“Over the past 12 months, we have seen a 56% increase in the number of employers with 10 or more employees using Australian Ethical.”
Australian Ethical Balanced fund performance v sector over the year to 31 December, 2019
Bushfire economic impact
According to a report by UBS, the bushfires could drag gross domestic product (GDP) by 0.25% per quarter this quarter and last quarter.
“Agriculture, retail, tourism, and construction are likely to be hit the hardest but the exact impact across each sector is difficult to determine,” it said.
“Stocks with exposure to retail, insurance, food and beverage and transport are likely to have the largest negative effects, while resources, building materials and infrastructure sectors are only likely to be mildly affected.
“In terms of insurance cost, the impact is expected to be significant; with some industry estimates suggesting the cost could be similar to the 2009 Black Saturday fires (c.$2 billion in today’s dollars). The current estimate of losses from the Insurance Council of Australia (ICA) stands at c.$1.34 billion, and will likely continue to rise.”
