The average ethical investment fund dropped 16.74 per cent in value between July 2008 and July 2009, showing it is not always easy being green.
The research from Investment Life & Pensions Moneyfacts revealed that during the same period, the average non-ethical fund value dropped by 12.37 per cent.
One of the reasons for the greater drop in value for ethical investment funds could be the fact that they do not access defensive sectors such as pharmaceuticals and tobacco, which its non-ethical counterparts have been relying on to ride out the economic storm.
Nevertheless, the gap between ethical and non-ethical investment fund shortfalls has narrowed, and the number of ethical funds available has increased in recent years, sparking hope for the ethical investor.
Commenting, Richard Eagling, editor of Investment Life & Pensions Moneyfacts said: "With the performance of ethical funds still currently lagging behind that of their non-ethical counterparts, there is little doubt the past couple of years have been challenging for the green investor.
"However, given that the spotlight has swung back towards all things ethical and quite possibly turned green too, it is unsurprising that optimism remains high that real progress might soon become a reality."
Testament to this ethical mood is the fact that recent research from The Cooperative Investments suggests that 18 per cent more people are intending to invest ethically this year.
In fact, according to the report from Investment Life & Pensions Moneyfacts, as green issues come to the foreground of Government policy, many commentators have identified a growing trend for investment managers to incorporate environmental, social and governance (ESG) issues into mainstream investment.
Mr Eagling adds: "It is also appropriate to note that ethical funds still represent only just over one per cent of total funds under management, providing considerable scope for improvement."
Compare ethical investment options »
© Fair Investment Company Ltd