Australian Ethical Investment Limited is an Australia

Australia

Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

n owned company established in 1986 for the purpose of environmental and socially responsible investing

Socially responsible investing

Socially responsible investing , also known as sustainable, socially conscious, or ethical investing, describes an investment strategy which seeks to consider both financial return and social good....

. The company is based in Canberra

Canberra

Canberra is the capital city of Australia. With a population of over 345,000, it is Australia's largest inland city and the eighth-largest city overall. The city is located at the northern end of the Australian Capital Territory , south-west of Sydney, and north-east of Melbourne...

 and is listed on the Australian Stock Exchange

Australian Stock Exchange

The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....

 (ASX).

Investment strategy

The company offers a number of investment trust funds and superannuation

Superannuation in Australia

Superannuation is a retirement program in Australia. It has a compulsory element whereby employers are required by law to pay an additional amount based on a proportion of an employee's salaries and wages into a complying superannuation fund.An individual's superannuation fund can be accessed...

 trust funds with all investments guided by an Ethical Charter. The charter seeks out investments which are environmentally friendly or encourage workers' participation in the ownership and control of their work organisations and places, while excluding investments which pollute or produce harmful products, are speculative, encourage militarism, or deemed exploitative or discriminatory.

Australian Ethical donates 10% of its company profit to Australian charitable, benevolent and conservation projects through a community grants program.

Ethical investment funds offer different degrees of socially responsible investing, sometimes differentiated within the industry as "deep green", "green" and "pale green" funds. According to Credit agency Standard & Poor's

Standard & Poor's

Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...

Australian Ethical Investment is arguably the only true green fund operating in Australia as of early 2007.

The focus of AEI is on investing in ‘highly ethical’ companies through using positive screens for finding companies involved in the renewable energy sector, the production of ‘natural food’, recycling and public/efficient transport providers, as well as excluding companies on several grounds, including uranium mining. According to Michael O'Brien, International Portfolio Manager with Australian Ethical Investments this screens out about 90% of the Australian market and has resulted in AEI seeking out overseas investments that meet its ethical criteria.

Performance

In the five years to 31 July 2010, the Australian Ethical Small Companies fund produced an average annual return of 5.60%, higher than mainstream share options at 4.21%.