Why an ethical screen can improve returns

Jack Lowenstein

I recently spoke with Tom Pietrowski at Commsec about the Morphic Ethical Equity Fund. In the video, I make the case that ethical investing does not constrain performance, particularly given our negative view of some key sectors we screen out, such as energy and tobacco.

“The only reason tobacco stocks did well was they had high dividend yields in an era of falling bond yields. Now those bonds are picking up, those stocks won’t do well. We expect people will get better returns investing with us with an ethical screen.”

Key points:

  • The fund will focus on global equities, with a tight focus on risk management.
  • Up 17% p.a. since launch, with low volatility.
  • Excludes arms, tobacco, alcohol, intensive farming, energy, uranium, gambling.
  • Believe that ethical screen can improve returns.
  • Big energy stocks unlikely to perform as value is from in-ground resources, much of which may never be exploited.

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