ASB has entered the impact investing game with a new fund available via its KiwiSaver and retail product suite.
The ASB Positive Impact Fund (PIF), which officially launched in July, invests in international equities and global fixed income through vehicles managed by Mercer and Vanguard, respectively.
According to ASB disclosure documents, the PIF has a target asset allocation of 60 per cent to global equities and 40 per cent in international fixed income.
In a departure from norm for the index-style ASB, the offshore equities component in the PIF is the actively-managed Mercer Socially Responsible Hedged Overseas Shares Portfolio.
However, ASB reverts to type for the PIF international fixed income portfolio – the Australian-domiciled passive Vanguard Ethically Conscious Global Aggregate Bond Index Fund, hedged to the NZ dollar.
“… for the Positive Impact Fund we do not run a quarterly target asset allocation review. For this Fund the target asset allocation aligns with its reference portfolio,” ASB says in disclosure documents.
The ASB website says the PIF eschews investing in “fossil fuels, alcohol, tobacco, gambling, controversial weapons, whale meat and adult entertainment”.
“About 35% of the fund’s growth assets will focus on investments in companies solving global issues,” ASB says. “Whenever possible, these investments will align with the UN Sustainable Development Goals.”
The fund also integrates environmental, social and governance (ESG) in the investment process, ASB says.
But the extra socially responsible layers have added costs. The PIF annual fund fee is set at 1 per cent (plus yearly member administration fees of $30) compared to 0.7 per cent for the Growth Fund – the next most-expensive investment option in the ASB range.
ASB says it launched the new impact fund following many requests from clients asking for “a different sort of fund”.
“They want to put their investment to work to give the world a better future, but still want solid long term returns,” the website says.
Impact investing has attracted almost US$230 billion globally, according to a 2019 OECD report, although the concept remains woolly.
The OECD study says there is a risk of “impact washing” due to: diverse definitions; lack of standardised international data; and “underdeveloped impact measurement practices”.
Historically, most impact investing has involved direct ownership of assets such as social housing.
In NZ, impact investing has to date been limited to mainly charitable fund projects. Although, last year the Impact Enterprise Fund (IEF) – a collaborative effort between the Ākina Foundation, New Ground Capital and Impact Ventures – raised $8 million in a first-of-a-kind fundraising in NZ.
Last year Mercer also added an impact fund, managed by US firm Wellington, to the Socially Responsible Investment Global Equities multi-manager portfolio, joining Stewart Investors, Acadian and Schroders on the menu.
Mercer is also investment adviser to ASB along with Colonial First State Asset Management. ASB parent, the Commonwealth Bank of Australia completed its US$2.7 billion sale of Colonial First State Global Asset Management to Mitsubishi UFJ Trust and Banking Corporation early this August.
ASB has about $15 billion under management, including more than $10 billion in its KiwiSaver scheme. The investment business falls under the purview of ASB head of wealth, Adam Boyd.