A wealth management company that will appeal to ESG investors.
Australian Ethical does what is said on the label. It allows investors to gain access to actively managed ethically based funds.
While the company excels in ESG investing, the fund charges a premium for some of its services, especially compared to its competitors.
However, with cheaper entry points, a long track record of performance and a focus on ESG, the fund can certainly help investors ‘do the right thing’ while growing their nest egg.
Australian Ethical is a wealth management company that actively seeks out investments that are positive for society and the environment while avoiding those deemed harmful.
It has 9 different managed fund options which are focused on sustainability, clean energy, waste management, recycling, health and responsible banking. It excludes investments in mining activities, weapons, tobacco and gambling to name a few.
What are the key features of Australian Ethical managed funds?
Fund description | Minimum investment | Risk | Fees |
|---|---|---|---|
| High Conviction Fund. This is an actively managed share portfolio of between 20 and 35 select shares predominantly from the ASX 300 based on their social, environmental and financial credentials. The fund aims to beat the S&P/ASX 300 Accumulation Index and recommends investors take a long-term approach, investing for at least 7–10 years. | $25,000 (wholesale) | Very high | Management fee – 0.80% p.a. Performance fee – 15% |
| Australian Share Fund. This is an actively managed fund with management generally selecting shares for growth rather than income. It is focused on the ASX and sections are also based on their social, environmental and financial credentials. The fund aims to beat the S&P/ASX 300 Accumulation Index and recommends investors take a long-term approach, investing for at least 7 years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | Very high | Management fee – 1.69% p.a. |
| Emerging Companies Fund. An actively managed fund based on a diversified bunch of shares in small cap companies, once again based on their social, environmental and financial credentials. The fund aims to beat the S&P/ASX 300 Accumulation Index and recommends investors take a long-term approach, investing for at least 7 years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | Very high | Management costs – 1.69% Performance fee – 20% |
| International Share Fund. An actively managed fund where investors own a pool of assets overseas. Each of the investments must meet the Australian Ethical ESG standards. The fund again suggests a long-term approach of at least 7 years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | High | Management fee – 0.99% |
| Balanced Fund. A less risky option for investors, the fund tries to balance capital growth and moderate levels of income. Investors own a combination of Australian and New Zealand small caps, international shares, property, alternative assets, interest-bearing securities and cash. The fund suggests investors hold for 5 or more years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | Medium to high | Management fee – 1.51% |
| High Growth Fund. An actively managed fund where investors own a mixture of ethically based Australian and international shares, unlisted property and alternative assets. The fund's main objective is to return investors CPI plus 4.5% over the long term. It is recommended that investors in the fund leave their money for at least 10 years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | High | Management fee – 1.39% p.a. |
| Diversified. The fund aims to give investors a diversified share portfolio of Australian and international companies that meet the Australian Ethical ESG guidelines. Generally investors will be exposed to Australian companies in the ASX 200. The fund recommends investors take a long-term approach investing for at least 7 years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | High | Management fee – 1.39% |
| Fixed Interest Fund. This is one of the less risky options offered by Australian Ethical, with investors primarily invested in fixed rate bonds from issuers such as Commonwealth and state governments, banks and other corporate lenders that meet an ethical framework. Investors are advised to keep their money in the fund for a minimum of 3 years. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | Low to medium | Management fee – 0.5% |
| Income fund. This is the least risky fund that is offered by Australian Ethical. The fund allows investors to gain access to a diversified mix of interest-bearing income investments, ranging from bonds to short-dated deposited and high-grade mortgage-backed securities. The fund suggests holding your money there for at least 1 year. | $1,000, or $500 if you start a regular investment plan of at least $100 per month | Very low | Management fee – 0.20%
|
*Australian Ethical provides the risk ratings
*Keep in mind lower risk generally means lower return
This is a rare win for investors who can do "the right thing" yet still get ahead financially.
Australian Ethical certainly appeals to investors who are looking to align their morals with their money, but the company goes further than that.
Australian Ethical will appeal to investors who are looking to align their morals with their financial outcomes.
According to the Mercer Investment Performance Survey, Australian Ethical's Australian Shares Wholesale Fund ranks number second over 1 and 3 years and ranks third over 5 years out of 81 funds recorded.
You can become an Australian Ethical mutual fund member by filling out the online application form on its site.
According to Australian Ethical, this is a 10-minute process, but you will need a few things ready before you begin.
You'll need to provide:
Once you've added your information and Australian Ethical has successfully identified you, you'll be sent the details to your new account.
Australian Ethical provides customer support for members from Monday to Friday, 8:30am to 5:30pm AEST via the phone or email as well as a frequently asked questions subsection.
In order to get in contact if you're having any issues click on the contact page on Australian Ethical's site.
Cameron Finder
Writer
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