Sustainable fund Thrive+ outperforms rivals: Chant West report

If you’ve ever wondered whether investing responsibly means sacrificing returns, the performance of our flagship sustainable investment option, Thrive+ Sustainable Growth fund, suggests not. 

Now just over two years old, Thrive+ – and the category of comparable responsible growth investment options in general – has produced returns that can compete with, and outperform, traditional funds with a similar allocation to growth assets.  

Responsible investing involves the consideration of environmental, social, and governance (ESG) risks alongside financial considerations. 

Thrive+, which is certified by the Responsible Investment Association of Australasia (RIAA), looks to invest with the intention of supporting certain companies or activities whilst not investing in others, that in the view of CFS and the Thrive+ investment managers, will have an adverse effect on the environment or society.  
 

Australia’s responsible investment market was valued at $1.3 trillion in 2022, or 36% of the market **. 

Almost nine in 10 Australians expect their investments to be responsible and ethical, and two-thirds say they would invest more if their money actively contributed to a better world^##.

CFS Chief Investment Officer Jonathan Armitage says responsible investing is becoming increasingly important to investors.

“Today, investors are more concerned than ever before about issues such as climate change, human rights and ethical supply chains,” Jonathan says. 

“As a result, there continues to be increased demand for investment strategies that can adopt meaningful and measurable sustainability practices to deliver both positive sustainable outcomes and positive performance outcomes.”

At CFS, investors can choose to invest in responsible investing options including Thrive+ as a standalone investment or inside your super. 

Socially Responsible Growth investment options delivered a median net return of 13.6% for the 12 months to September 2024, according to independent research house Chant West, which regularly benchmarks the performance^ of similar responsible investment options administered by a wide range of super funds. 

This performance just beat the 13.5% median net return delivered by traditional Growth funds tracked by Chant West over the same period. Both groups featured investment options with 61% to 80% allocation of assets to growth investments, and returns were calculated after fees and taxes had been taken out.  

Thrive+ was equal first for performance in the Socially Responsible Growth fund category as tracked by Chant West over the year to 30 September 2024 and also outperformed the traditional growth funds, according to the report. 

Over the previous 12 months, to September 2023, Thrive+ achieved a net return of 12.1% in what was its first year and also outperformed all Socially Responsible Growth options benchmarked by Chant West. This return was well above both the median return for responsible investment growth options of 7.7% and the traditional growth median return of 9.2%. 
 

Over the past 10 years, Socially Responsible growth funds delivered a median net return of 7.8%, according to Chant West category data, again outperforming the 7.3% return of growth investment options more broadly. 

This performance is backed up by figures from RIAA, which concluded that leading responsible investment Australian share funds have outperformed mainstream Australian share fund benchmarks over 1, 3, 5, and 10-year time frames*. 

RIAA-certified products performed on par with or better than benchmarks over the medium and long term, with particularly strong results across managed growth funds, a RIAA report found**.

At CFS the managers we appoint for our FirstChoice options may choose to integrate a range of environmental, social and governance factors as part of the investment process. 

CFS Thrive+ is managed to a sustainable investment criteria as set out in the Thrive+ Sustainable Investment Charter that encourages investment in companies with a sustainable business and strong environment, social and governances (ESG) characteristics. 

The Thrive+ investment managers invest with the intention of supporting certain companies or activities whilst not investing in others, that in the view of CFS and the Thrive+ investment managers, will have an adverse effect on the environment or society.

Thrive+ investment managers look to invest in areas including, but not limited to, climate change solutions, resource efficiency, sustainable communities, healthcare, and diversity and inclusion. 

Through our Stewardship provider and our Thrive+ managers, CFS practises active ownership. This means that through voting at company meetings and engaging with company management, we use our influence as a shareholder to affect the way companies do business. 

The types of companies and activities Thrive+ actively seeks both to invest in and to exclude are outlined in detail in the Thrive+ Sustainable Investment Charter.

The Thrive+ Sustainability Report provides examples of the types of companies in which it invests. Among the companies in which Thrive+ invests – both for their sustainability credentials and because they satisfy the financial conditions for strong investment – are semiconductor maker Applied Materials and scientific equipment manufacturer Thermo Fisher.

Applied Materials makes engineering solutions used to produce semiconductors and display equipment, with approximately 20% market share of the semiconductor capital-equipment manufacturing sector^^. 

Net zero emissions is not possible without semiconductors. They are essential in processing, storing, and transmitting data in sectors of the economy which are driving the transition to net zero, such as electric vehicles, automated factories and smart grids, as well as being vital in powering generative AI. 

Applied Materials works with customers to reduce the semiconductor industry’s energy footprint. 

Thermo Fisher Scientific is one of the world’s leading scientific testing and analysis equipment companies with customers in research, healthcare, industrial and applied markets.

It is exposed to a variety of markets including pharma and biotech and now generates around 60% of revenue from pharmaceutical customers, up from 25% a decade ago. Product testing and analysis is a growth area due to the increased need for testing for air, water and soil pollution, and food testing globally^^.

It has committed to net zero emissions by 2050 and has set a goal of requiring 90% of its suppliers to set science-based targets by 2027. 

Thrive+ is also looking to invest in companies and projects that can play a key role in the climate transition while generating attractive returns through an allocation to Just Climate, an investment business dedicated to climate-led investing and a subsidiary of Generation Investment Management. Based in London, Generation was founded in 2004 by partners including Chairman Al Gore and Senior Partner David Blood and has over 190 years of combined investment experience.

The Climate Asset Fund is focused on highest emitting industries most off-track with net zero,   providing capital to first-of-a-kind projects like green steel production, low carbon cement and emerging markets scale-up of wind and solar.

Initial investments have included Swiss-based global electric vehicle (EV) charging leader ABB E-mobility, Swedish green steel start-up H2 Green Steel (now re-named Stegra), Swedish renewable energy firm Meva Energy and Infinitum Electric, which make next-generation electric motors.

 
Discover how CFS approaches responsible investing or learn more about Thrive+.