Many Australians are actively striving to do the right things for the planet and our global community through their superannuation and retirement choices.
However, selecting a super fund can be a time-consuming and challenging process. Many of us may never have revisited our super funds in our life since our first job. Some of us may even have more than one account that is eating up our super balance with unnecessary fees.
With all that said, how can we pick a superannuation fund that corresponds with our real-world values and does the best things for our financial future as well?
What Exactly Is an Ethical Super Fund?
An ethical super fund is a superannuation fund that actively seeks to invest your assets in industries and companies that are considered to be ethically responsible. Ethical super funds tend to consider a range of factors in their investment choices including social, environmental, and moral effects.
Ethical investment often entails supporting firms and sectors that have a beneficial influence on communities and the environment while avoiding those that have a negative impact.
If you’re asking what we mean by “negative impact,” the answer is that it varies. Not all super funds are created equal. However, choosing a typical index fund may result in your money being invested in sectors such as fossil fuels and tobacco. Some regular super funds invest their money into companies that have a low quality of human rights or that have a poor environmental impact.
When you pick an ethical super fund, you have the freedom to choose where you want to invest your money.
Where Do I Find Ethical Super Funds?
Some Australian super funds are labelled as completely ethical and will only invest in ethical ways.
With such a rapid increase in popularity for Australians to choose ethical, some other super funds are also developing ethical investing solution options for their customers to choose from.
If you want to learn more about super funds and their investment, the Responsible Investment Association Australasia (RIAA) is an excellent place to start. As an impartial third party, they uphold an investment standard, promote transparency, and help defend against ‘greenwashing’.
Do Ethical Super Funds Perform as Well as Standard Funds?
If you’re approaching ethical investment for the first time, you may be concerned that investing ethically means lower returns. While this may have been true a long time ago when ethical funds were less popular, this is definitely no longer the case.
Recent 2019 research by Morgan Stanley states that there is no financial trade-off when you select to place your money in an ethical super fund.
The returns of sustainable funds are in line with comparable traditional funds1
Obviously, your financial returns will fluctuate over time and will differ based on the super fund that you select, however on average, an ethical super fund performs similarly to a traditional super fund.
The takeaway here is that managing super funds can be complex, and finding an ethical one that is truly ethical and in line with your values can prove even more challenging. However, with the guidance of an ethical superannuation and investment expert, you can be sure you are making the right decisions for your money and the future of our planet.
For more ethical investment advice, Novo Wealth is more than happy to help. Whether it’s to save for retirement or make a positive impact on the world with your money, our services can help you get there. Request a meeting today!