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EOFY update

FY20-21 general commentary

Many parts of the world remain in deep crisis due to the pandemic. While the threat of lockdowns and other restrictions remains a risk, the focus has now shifted to recovery although its success hinges on further suppressing the virus and expanding vaccinations to reach a level of broad immunity.

This recovery will - we believe - support our general investment philosophy as attitudes to sustainability and climate change continue to shift, supported by growing ambition among policymakers, regulators and investors.

The second half of 2020 in particular saw a truly historic shift, with high-profile net zero commitments from many countries (including Canada, China, Japan, South Korea and others) as well as from many global corporations. Many governments have pledged to direct some of their economic stimulus to accelerating the low–carbon transition. For example, Biden’s US infrastructure spending bill, if signed into law, will arguably become the largest ever single economic program addressing climate change.

As a result, we hope to see more opportunities to invest responsibly as the world begins to meaningfully transition towards a more sustainable future.


The 2021 financial year will go down as one of the better periods for equity markets in recent years. Despite the challenges of COVID, the Australian share market reached new highs during the past twelve months breaking through 7000 points early in 2021. The final quarter of the financial year saw the Australian market (ASX300 including dividends) continue its upward march, returning 8.5% and closing the year 24% higher (ASX200).

International equities performed even better for the year, with the benchmark MSCI World Index Ex AU generating a return of 28% in Australia dollars and almost 40% in US dollars. The difference between the AUD and USD returns of global equities shows the strength of the AUD through FY21, starting the year at 0.69 USD per AUD and ending at 0.75.

For investors focused on preserving and increasing real wealth, inflation remains an ever-present threat. If rising inflation forces central banks to increase interest rates, this is likely to lead to losses in the fixed income securities and other traditionally defensive assets. Ironically, equity markets may be more insulated if earnings growth continues to be delivered along with inflation, and those sectors that are able to pass on the price rises may benefit due to operating leverage.

Fund updates

Balanced Fund

The Balanced Fund has delivered solid returns over the medium term, beating its benchmark over 1 and 3-year periods ending 30 June 2021^.

Australian Shares

The Australian Shares Fund has delivered outstanding performance as at 30 June 2021^, consistently outperforming its benchmark over the medium to long term.

Emerging Companies

The Emerging Companies Fund has delivered strong performance as at 30 June 2021^, significantly outperforming its benchmark over the medium term.

^Past performance is not a reliable indicator of future performance. Australian Ethical offers a diverse range of investment options depending on your investment objective, timeframe and risk profile. You can see the options and their respective performance here.

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.

Australian Ethical acknowledges the Traditional Owners of the country on which we work, the Gadigal people of the Eora Nation, and recognise and celebrate their continuing connection to land, waters and culture. We pay our respects to Elders past, present and emerging and thank them for protecting Country since time immemorial.