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Quarterly update – September 2021

General commentary

The world continued to navigate a range of challenges during the September quarter 2021. The emergence of a new COVID-19 variant, hurricanes resulting in massive floods, and strained supply chains, to name a few, saw climate change rise to the top of the agenda.

What kept climate there, and in fact made it one of the biggest stories of the quarter, was the publication of the IPCC report in August. The report provides the clearest picture yet of the effect of human activities on climate. The message could not be clearer: as long as we continue to emit CO2 the climate will continue to warm and extreme weather events will continue to intensify.



The significant rise in temperatures is already having impacts, with the IPCC report noting that Australasia has already experienced more hot extremes, higher rates of sea level rise than the global average, decrease in snow cover and depth, an increase in the frequency of fire weather days, a longer fire season and less rainfall during winter in southern Australia.

In September, the RBA said a number of regions could see a material decline in housing prices due to physical risk from climate change, with many homeowners facing declining equity in their houses and rising insurance costs. It also said the risks created by climate change for the Australian financial system will rise over time to become substantial if they are not properly managed.

It has never been clearer that climate risk is investment risk. As governments, companies and financial systems across the world transition towards a more sustainable future in support of net-zero goals, there will be increased opportunities and risks for investors.

Australian Ethical is well positioned to capitalise on these opportunities, and manage the risks, due to our well-established ethical investing philosophy and process which has been refined over the past thirty five years.

Share markets across the globe seemed to reflect the challenges the world was experiencing during the September quarter. Despite an initial pullback in July due to the spread of the Delta variant, share markets bounced back in August before reversing most of the quarter’s gains in the final month of September.

Overseas, US economic growth appeared to show signs of slowing, and US fiscal and monetary support slowly began to be withdrawn. In China, news that property development goliath Evergrande was on the brink of collapse piled onto concerns around the CCP crackdown on tech companies and slowing economic growth. The MSCI World Index returned 0.7% (measured in local currency) over the September quarter.

Locally, the S&P/ASX 200 returned 1.7% over the September quarter, with the market recording its first monthly decline this year for the month of September. This reflected a number of issues concerning global markets including risks of higher inflation, tapering of QE, bond yields pushing higher, debt ceiling negotiations in the US, and the Evergrande property fallout in China. However, domestic economic indicators remain supportive, with the unemployment rate falling to 4.5%, consumer confidence rising, and interest rates remaining at record lows.

In bond markets the Australian 10-year government bond yield finished approximately where it started. Yields spiked back up in late September, having fallen below 1.2% on concerns Delta may disrupt the economic recovery, as central banks globally turned more hawkish – indeed, after the quarter ended on Melbourne Cup Day, the RBA has stopped yield curve control.

Fund updates

Balanced Fund

The Balanced Fund finished the quarter up 3.1% (Wholesale Fund 3.3%), outperforming both its benchmark and the median in the Mercer Balanced Growth Universe (retail and wholesale) as at 30 September 2021.

Australian Shares

The Australian Shares funds (Wholesale & Retail) continued to deliver strong performance, outperforming over the September quarter, as well as medium and long-term periods.

Emerging Companies

The Emerging Companies Fund performed strongly over the September 2021 quarter, with the retail and wholesale funds outperforming their benchmarks, the S&P/ASX Small Industrials Index, by 5.9% and 6.0% respectively.


The SMA portfolio outperformed its benchmark over the quarter, delivering a return of 2.3% (net) compared to the ASX 200 Accumulation Index’s return of 1.7%.

More commentary & reports

EOFY Update


^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.