Audrey Ryan is an experienced fund manager who is passionate about ethical investing
This fund invests in UK companies using an 'exclusions-based' approach, avoiding companies involved in activities deemed unethical
We think Ryan handles the constraints of managing an ethical fund well and has the potential to do a good job for patient investors
This fund currently features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential
How it fits in a portfolio
The Aegon Ethical Equity fund aims to provide a combination of income and capital growth over the long term by investing in companies that meet its ethical criteria.
We think the fund could be a good addition to the UK section of an ethical portfolio, designed to limit or exclude investments in industries some find immoral, such as tobacco or alcohol. It could also be used by investors who want to add an ethical element to their broader investment portfolio. Ethics are personal though, so make sure you’re happy with the fund’s approach before investing.
Manager
Audrey Ryan started her career as a UK smaller companies portfolio manager at General Accident, before moving to Aegon (previously Kames) in 1997. She began managing the Aegon Ethical Equity Fund in 1999 and is a passionate ethical investor. We think she's one of only a few fund managers who have handled the constraints of an ethical fund well over the long run.
Ryan's experience and longevity at Aegon mean she's co-manager on the Aegon Ethical Cautious Managed Fund and also supports the managers on the Aegon Global Sustainable Equity Fund and the Aegon UK Smaller Companies Fund. We think this workload is manageable for someone of her calibre. She's also got the support of the broader Aegon UK Equity team, including the fund's back-up manager Sajeer Ahmed.
Meet the manager of the Aegon Ethical Equity fund
Process
This fund invests in UK companies using an 'exclusions-based' approach, so it doesn’t invest in companies involved in activities deemed unethical. The UK stock market is filtered for these ‘sin stocks' by Aegon's ESG Research Team. The screening process is kept separate from Ryan and the rest of her team, leaving them free to focus on stock selection and portfolio construction, and to provide some independence and credibility to the screening process. The ethical screens are reviewed every two years following an investor survey. In the past, findings from the survey have influenced the team to change their stance on matters such as oil and gas, removing the sector entirely from the fund. The most recent results in 2025 indicate continued support for the fund’s approach to exclusions, with some areas like nuclear showing interesting trends to watch in future surveys.
Below is a more detailed list of the type of companies that the fund won’t invest in:
Animal welfare - companies that provide animal testing services, make or sell animal-tested products, are involved in intensive farming, operate abattoirs or slaughterhouses or sell meat, poultry, fish or dairy
Military - companies that make armaments, nuclear weapons or similar strategic products
Nuclear power - companies that provide important services to, or own or operate, nuclear facilities
Environment - companies that excessively damage the environment, in breach of internationally recognised conventions on biodiversity or not tackling climate change
Political donations - companies that have made political donations in excess of 1% of revenues in the past 12 months
Gambling - companies with investments in betting shops, casinos or amusement arcades which account for more than 10% of their total business
Alcohol - companies where more than 10% of their total business involves brewing, distillation or sale of alcohol
Tobacco - companies where more than 5% of their business involves growing, processing or selling tobacco
Pornography - companies that provide adult entertainment services
Banks - corporate or international banks with exposure to large corporate or Third World debt
Oppressive regimes - companies operating in countries with poor human rights records or with no established policies on human rights issues
After this screening, 48 of the companies that feature in the FTSE 100 index, and 124 of the companies that feature in the FTSE 250 are uninvestable for the fund. Of the remainder, Ryan wants to invest in companies benefitting from structural changes in the economy. An important part of the fund's investment process is meeting with company managers. These meetings allow Ryan and her team to build a deep understanding of each business, and the challenges and opportunities it has ahead. They will also consider how the stock’s valuation compares to what their analysis suggests it's worth, and how it’s been valued in the past.
In recent months, Ryan has made some changes to the portfolio. Chemicals business Victrex was sold following updates to the ethical screen in place, making the company no longer investable for Ryan. Banking group, Lloyds, was added as a new position, as was industrial business, Schneider Electric.
Culture
Aegon’s asset management business has operated through several brands, including Aegon Asset Management then Kames Capital, and is now known as Aegon Asset Management again.
In September 2020, Aegon completed an integration process which allowed the former Kames Capital business to leverage the expertise and research capabilities of the broader Aegon group, while Aegon benefited from Kames’ expertise managing ethical and sustainable funds. The Kames Capital brand was then retired.
We typically treat corporate changes with caution. A few years on the changes appear to have bedded in well, although we will continue to monitor this. We're also mindful that there have been some significant departures from the company in recent years, although none have significantly impacted the UK Equity team, which has remained stable. We continue to monitor the situation closely and will write to investors if our views change.
ESG Integration
After the extensive screening approach has narrowed the fund’s investable universe, Ryan and her team aim to identify and understand the main Environmental, Social and Governance risks of each company, industry and sector they invest in. They believe companies that lead the way in governance and sustainability can outperform over the long run.
Aegon has a rich heritage in responsible investment, having had ethical and sustainable funds as part of its fund line up for more than thirty years. Fund managers across the firm see it as their responsibility to encourage companies to maximise investment returns through good governance practices and respect for the environment and society.
The firm’s position on several controversial areas can be found in its Responsible Investment policy. Companies that derive more than 10% of their revenues from the exploration, mining, and refining of thermal coal are excluded from all Aegon-managed funds, and this threshold will reduce to near zero by 2030. Companies involved in controversial weapons, or that earn more than 5% of their revenues from tobacco, oil sands or arctic oil & gas exploration are also excluded. Finally, Aegon funds don’t invest in companies believed to systematically breach human rights, and Russian and Belarusian companies are not considered.
The firm produces an annual Responsible Investment and Stewardship report which goes into detail about its ESG processes and provides a full breakdown of the firm’s voting activity, as well as engagement case studies. The team also produces a range of articles on responsible investment, which can be accessed via their website.
Cost
This fund has an ongoing annual fund charge of 0.77%, but a discount of 0.15% is available for HL investors, which reduces the charge to 0.62%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside an ISA or SIPP. The HL account charge of up to 0.45% per year also applies, except in the HL Junior ISA, where no account charge applies.
Performance
48 of the UK's 100 largest companies are excluded from the fund's investment universe for ethical reasons. The fund therefore has a long-term bias towards higher-risk small and medium-sized companies. A focus on small and medium-sized companies can increase risk and these companies tend to rely more heavily on the health of the UK economy. This, combined with the fund's lack of exposure to industries like oil & gas and tobacco, means its performance can differ to that of more conventional UK equity funds.
Ryan has done a good job for investors over the long term, outperforming the FTSE All Share index since she became manager of the fund in January 1999. Over this period, her fund has delivered returns of 446.03% well ahead of the FTSE All Share index return of 357.77%. Past performance isn’t a guide to the future.
Over the last 12 months, the fund has delivered a return of 0.90%, lagging behind the 12.06% return from the FTSE All Share index. Our analysis suggests that the fund’s investments in the technology, real estate and communication services sectors were detractors from returns over the period. On the other hand, its investments in the industrials sector were additive to performance.
The fund invests more than the index in sectors like technology, consumer discretionary and industrials which gives the fund a growth tilt.
Overall, we think Ryan is an excellent investor who has handled the constraints of managing an ethical fund very well over the long term. We think will continue to do a good job for patient investors in the future, although there are no guarantees.
Annual percentage growth
Jul 20 – Jul 21 | Jul 21 – Jul 22 | Jul 22 – Jul 23 | Jul 23 – Jul 24 | Jul 24 – Jul 25 | |
|---|---|---|---|---|---|
Aegon Ethical Equity | 31.68% | -15.95% | -0.76% | 20.80% | 0.90% |
FTSE All Share | 26.64% | 5.51% | 6.09% | 13.54% | 12.06% |