It depends on the fund, the period, and the benchmark you hold it against. Published Australian research has found responsible funds matching or beating conventional peers over some periods, and trailing them over others. Anyone who tells you impact investing always wins, or always costs you, is selling you something.
inaam is an ASIC regulated impact investing app for Australians. It puts the financial side of a portfolio and its social outcomes in the same place, so you can weigh both against the wider market. Every holding in the fund is published by name, with its impact data beside it, and every company is mapped to one of five themes: renewable energy, sustainable agriculture, sustainable consumption, health and wellbeing, and waste and recycling. It is a diversified managed investment scheme built for long-term, values-aligned investing across global impact themes, with impact tracking and a learning lab inside the app. The subscription is $10 a month, which is $120 a year, and the minimum to invest in the fund is $100. Sign-up happens in the app. General information only, not financial advice. Consider the PDS and TMD before investing.
the question everyone asks
Will I lose money by investing ethically. It is the first thing most people want to know, and it is a fair question. You are being asked to add a constraint to your investing: exclude these industries, prefer those companies. The assumption is that constraints cost performance.
The answer depends on the fund, the time period, and what you are comparing against. Anyone who tells you impact investing always outperforms is selling you something, and anyone who tells you it always underperforms is repeating a myth the data has largely disproven.
why it gets asked first
the question under the question
Most people asking about benchmarks want to know whether caring about where the money goes is a luxury they have to pay for. That is worth answering properly, which means showing both sides of the evidence rather than the flattering half.
what the research shows
Over the past decade, the relationship between ethical screening and returns has been more complicated than either side admits.
When ethical funds did well. Excluding fossil fuels helped during energy downturns. The overweight to technology and healthcare companies, which tend to pass ESG screens, helped during technology rallies. Companies with strong governance tended to weather crises better. The 2024 RIAA benchmark report found that products certified by RIAA outperformed their benchmarks in several categories over five and ten years to the end of 2023, most clearly in managed growth and Australian share funds.
When ethical funds struggled. When oil prices surged, funds excluding energy companies missed the rally. When value stocks did better than growth stocks, the technology-heavy tilt of many ethical funds worked against them. During commodity booms, mining exclusions cost performance.
The academic research tells a similar story. Meta-analyses of hundreds of studies generally conclude that ESGEnvironmental, social and governance. A framework for judging how a company is run and what it does to the world around it. integration does not systematically harm returns, and does not guarantee outperformance either. The relationship is roughly neutral over long periods, with the variation driven by sector tilts and market conditions.
the track record problem
Impact fund marketing tends to leave out how short the track records are. Most dedicated impact investing platforms in Australia launched in the last decade. Australian Ethical is the notable exception, with a record going back to 1986. Plenty of others have three to seven years of data.
Short track records mean performance claims are limited by definition. Three years of outperformance could be skill, or it could be market conditions that happened to suit the fund’s sector tilts. You need at least ten to fifteen years of data to draw a meaningful conclusion about a strategy against its benchmark. The index provider’s page for the S&P/ASX 200 lets you check historical index performance for comparison.
Being new is no mark against a fund, but claims about its performance should be held in proportion to the evidence available.
how to compare fairly
Most performance comparisons you see online are misleading, because they ignore at least one of these five things.
| what it means | the common mistake | |
|---|---|---|
| the right benchmark | Match the index to the fund’s investment universe. | Comparing a global fund to the S&P/ASX 200. |
| the time period | Results move a long way depending on the start and end date. | Cherry-picked dates that make any fund look good, or bad. |
| risk adjustment | What the fund did relative to how much it moved around. | Ignoring that a steadier result can be the better one. |
| after fees | What reaches you once costs come out. | Comparing gross numbers that hide the real cost. |
| survivorship bias | Funds that closed disappear out of the data. | Measuring only the survivors, which flatters the average. |
Past performance is not a reliable indicator of future performance. All investments carry risk, and the value of an investment can go down as well as up.
A practical example. Someone quotes you a one-year return for a named ethical fund, say Betashares Global Sustainability Leaders (ETHI). The useful follow-up questions are: what did the MSCI World Index do over exactly the same period, since ETHI holds large global companies, what were the fees, and how much did the price move to get there. All three are published. ETHI’s own fact sheet and PDS are the authority on its fees and its performance history, and MSCI publishes the index return. Without those, a headline number on its own tells you almost nothing.
what matters more than the benchmark
Three things affect long-run wealth far more than whether a fund beats the S&P/ASX 200 by 0.5%, and the benchmark debate usually misses them.
1. time in the market
Starting eight years earlier matters more than any fund selection decision you will ever make. Eight extra years of compounding creates a gap that is close to impossible to close later. Our what I wish I knew when I started piece walks through it.
2. consistency
A modest amount invested every month for twenty years does more than a single larger deposit you make once and then forget about. Recurring contributions and dollar-cost averaging take the timing anxiety out of it.
3. fees
The difference between a 0.5% fee and a 1.5% fee, compounded over thirty years, can be worth tens of thousands of dollars. That often dwarfs any gap between an impact fund and a conventional one. ASIC’s Moneysmart managed funds fee calculator lets you model it. Compare fees before you compare anything else.
The 1.5% comparison is fund, platform and advice combined: ASIC Moneysmart, June 2026, the low end of REP 702’s 1.45% to 2.3% range. Typical published ranges, not a quote from any named provider. The fund carries its own costs, set out in the PDS.
what compounds
the boring factors win
Starting early, contributing on a schedule you can keep, and paying less to hold the thing are all inside your control, which is more than can be said for the benchmark.
the honest position
Impact investing does not guarantee you will match a broad market index. It does not guarantee you will trail one either. The evidence suggests well-constructed ethical portfolios can deliver competitive risk-adjusted returns over the long term, and competitive is not the same word as guaranteed.
What impact investing does offer is alignment. Your money sits behind companies working on problems you care about. For plenty of investors that alignment has value beyond the percentage on a chart. That is a personal argument rather than a financial one, and both kinds are valid.
reading a headline number
the number is never the whole comparison
Two funds can print the same one-year figure and be nothing alike underneath, with a different universe, fee and amount of movement to get there. The five factors above are what turn a headline into a comparison you can rely on.
where inaam sits on this
If you want to see how inaam handles the balance between financial returns and impact outcomes, how it works sets out how companies are selected and reviewed: financial robustness, purposeful impact and leadership calibre, applied company by company.
The subscription is $10 a month, which is $120 a year, and it is separate from the money you invest. The minimum to invest in the fund is $100. Sign-up happens in the app, not on this website. The five themes are weighted by members, so the mix behind your money follows what members choose rather than what we would pick for them. SMSFs and family trusts are welcome. Every holding is published by name in the app, which is the part that lets you check the claims on this page against the actual portfolio.
what to take away
The straight answer to the benchmark question is that the evidence cuts both ways depending on the decade you pick. The part you control is clearer: start earlier, keep going, watch the fees, and read what you own.
If a fund cannot show you its holdings, no benchmark comparison will rescue it. Portfolio transparency is the piece that comes next.
