September, 2023
Australian Ethical is one of Australia’s leading ethical fund managers. By investing responsibly in well-managed ethical companies, we deliver competitive financial performance to our clients and positive change to society and the environment. Since our inception in 1986, our Ethical Charter has guided all investment decisions and underpinned our business practices. Every year 10 per cent of our profits* are distributed to charitable organisations and social impact initiatives through The Australian Ethical Foundation.
Total returns are calculated using the sell (exit) price, net of management fees and gross of tax as if distributions of income have been reinvested at the actual distribution reinvestment price. The actual returns received by an investor will depend on the timing, buy and exit prices of individual transactions. Return of capital and the performance of your investment in the fund are not guaranteed. Past performance is not a reliable indicator of future performance. Figures showing a period of less than one year have not been adjusted to show an annual total return. Figures for periods of greater than one year are on a per annum compound basis. The current benchmark may not have been the benchmark over all periods shown in the above chart and tables. The calculation of the benchmark performance links the performance of previous benchmarks and the current benchmark over the relevant time periods.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/190856559.pdfJune, 2022
The International Shares Fund declined -8.4% (-8.3% Wholesale) over the June quarter versus its benchmark (MSCI World ex Australia) which decreased -8.4%, resulting in slight outperformance for the Wholesale fund of 0.1%. The global equities markets reacted negatively to inflation pressures and rising interest rates over the quarter, particularly the US which represents the Fund’s largest holding. The sectors positively contributing to the Fund’s performance were Consumer Discretionary and Materials, with both sectors being substantial underweight positions. The underweight positions were the driver of the contribution as both sectors underperformed their benchmark.
The sectors which detracted from performance were Real Estate and Financials. The Fund is substantially overweight both these sectors due to our ethical selection process. The Real Estate sector underperformed its benchmark due to interest rate movements. The associated effect of rising interest rates also resulted in the Financials sector underperforming.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/188883241.pdfDecember, 2021
There has been no shortage of headlines through the quarter which induced volatility into asset prices. Concerns about rising inflation, the rapid spread of a new variant of COVID, and the escalation of geopolitical tensions as the threat of a Russian invasion of the Ukraine appeared to become more imminent. These headlines were reflected in asset prices, and the VIX (a market measure of uncertainty) exceeded 28 in late November – compared to a long run median of 17, and a post emergence covid median of 23. While uncertainty was high as supportive economic data continued and as fears of widespread global lockdowns eased – the VIX declined back below 20 and equities actually ended the quarter on a positive note and long-term yields on Australian government bonds after exceeding 2% at the end of October were basically unchanged by the end of the quarter.
The International Shares Fund appreciated 6.0% (6.1% Wholesale) over the December quarter versus its benchmark (MSCI ex Australia) which increased 7.2%, resulting in underperformance of 1.2% (1.1% Wholesale). The sectors positively contributing to the Fund’s performance were Financials, IT and Real Estate, sectors where the Fund has overweight positions. In Financials, stock selection was the key input into outperformance whereas for IT, the driver was sector weight. Consumer Discretionary is a substantial underweight position but provided the most positive attribution as the stocks held significantly outperformed in the sector.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/182567058.pdfJune, 2021
Global markets posted another strong quarter with the MSCI World Index appreciating 7.7%. This was driven by the US where the S&P 500 rose 8.6%, and closely followed by Europe (MSCI Europe ex UK) which rose 7.1%. Australia kept pace, the ASX 200 was up 8.3% driven by cyclicals. In Asia performance was subdued relative to other regions; including the Nikkei which was down 1.2%. Performance in global equity markets was driven by improved economic activity, the roll out of the vaccination program and strong monetary and fiscal support. This improved economic activity was reflected in a rising Purchasing Managers’ Index. Unemployment rates have fallen faster than anticipated, and YoY Inflation rates have continued to rise – prompting investors to pay close attention to how Central Banks will react. However, despite the inflation concerns bond yields fell over the quarter with questions remaining around whether the rise in inflation will be sustained.
The International Shares Fund appreciated 8.6% (Wholesale class: 8.8%) over the June quarter versus its benchmark (MSCI ex Australia) which increased 9.33%, resulting in underperformance of 0.34%. The sectors contributing mostly to the Fund’s performance were Industrials, IT and Communication Services, sectors where the Fund has overweight positions. Industrials contributed 0.52% of the outperformance, but it was stock selection which generated most of the positive attribution.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/174702968.pdfDecember, 2020
The International Shares Fund increased 6.8% (7.1% Wholesale Fund) over the December
quarter versus its benchmark (MSCI ex Australia) which increased 5.7%, resulting in
the outperformance of 1.1% (1.4% Wholesale Fund). It was an eventful quarter where
markets reacted positively to a vaccine being rolled out, Biden ousting Trump and the
Brexit agreement being finalized. This resulted in very strong global performance,
particularly driven by the US, where the S&P 500 increased 11.7% and the Nasdaq
increased 15.4%.
The sectors contributing most to the Fund’s performance were Industrials and Utilities.
The Fund is overweight Industrials, with the overweight stocks outperforming over the
quarter. Stock selection in Utilities was also the main driver of the positive performance,
with the stocks held contributing positively while those not held underperformed the
benchmark. The Fund is overweight the IT sector which contributed 0.21% of
outperformance and for the first time this year, the stocks held performed strongly,
negating the non-holding of Apple, which returned 0.27% over the benchmark. The
sectors which detracted from performance were Energy and Materials, both of which the
Fund has zero weighting to due to our ethical selection criteria. Both sectors generated
positive returns relative to the benchmark, as the oil price increased 21% over the
quarter and metal prices increased on average 14%. The Fund is underweight the
Consumer Discretionary sector, which for the first time did not detract from performance
due to the below-benchmark performance of Amazon (not held).
September, 2020
The International Shares Fund increased 1.8% (2.1% Wholesale Fund) over the September quarter versus it benchmark (MSCI ex Australia) which increased 3.78%, resulting in underperformance of 1.9% (1.7% Wholesale Fund). The good performance of the overall global markets was driven by the very strong performance of the US, where the S&P 500 increased 8.5% and the Nasdaq increased 11%. In August the US indices broke record highs due to resilient company earnings, a shift in the Federal Reserve approach to monetary policy and optimism about a vaccine. As the Fund is underweight the US market (62% versus benchmark of 68%) it contributed to the underperformance.
The two sectors which contributed positively to the Fund’s performance were Energy and Utilities. The Fund is underweight Energy (the sector declined as the oil price decreased in September) due to our ethical selection criteria, which provided a positive contribution as the sector underperformed. Stock selection in Utilities contributed to the positive performance. The two sectors which detracted from performance were IT and Communication Services, both of which the Fund is overweight. Both IT and Communication Services provided positive returns, but relative to the benchmark the sectors underperformed due to stock selection. In the IT sector the Fund underperformed by 1.53%, with 0.88% of the underperformance attributable to the Fund not holding Apple due to our ethical selection criteria. The other negative contributor was Consumer Discretionary, a sector which the Fund is underweight. The largest stock in this sector is Amazon which the Fund does not hold, contributing an underperformance of 0.28% of the overall underperformance.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/international-shares-fund-wholesale-september-2020.pdfticker: AUG0025AU
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Australian Ethical International Shares Fund aims to provide long-term growth through investment in international companies, which meet the Australian ethical charter.
- The opportunity to invest in international companies on the basis of their social, environmental and financial credentials and that may not be available locally.
- The theme of the Fund is ‘global smart energy’.
- Utilises an active stock-picking management style with stocks selected for growth rather than income.
- All stocks are chosen on the basis of relative value where the manager deems the risks are being adequately priced.
- The portfolio has a moderate level of turnover and aims to be fully invested at all times.
manager_contact_details: Array
asset_class: Foreign Equity
asset_category: Large Blend - Responsible Investment
peer_benchmark: Foreign Equity - Large Responsible Index
broad_market_index: Developed -World Index
structure: Managed Fund