Harbour has tapped into ‘deep green’ French-founded manager, Mirova, to run global equities in its just-launched multi-asset Sustainable Impact Fund.
The Paris-headquartered Mirova shares the international equities portfolio duties with existing Harbour partner, T Rowe Price, for the new impact-style strategy.
Specialising in sustainable investment strategies, Mirova has about US$28 billion under management globally, including assets sourced from an Australian unit trust offered by French multi-affiliate business, Natixis Investment Managers. Mirova is also an underlying manager for Mercer.
Chris Di Leva, Harbour head of multi-asset, said both Mirova and T Rowe Price would operate concentrated portfolios – of about 50 and 70 companies, respectively – with all underlying holdings sheeted to UN Sustainable Development Goals (SDGs).
Di Leva said the concentrated approach would see the portfolios behave differently from the wider equities index at times but “we’re happy to show the performance against the broader index”.
Harbour targets an allocation of 35 per cent to global shares (over a 15-55 per cent range) for the new fund while managing most Australasian equities and NZ fixed income in-house. The Wellington-based manager has also appointed local firm, Icehouse Ventures, to run a small venture capital exposure within the impact fund.
“We did a lot of research and worked with a specialist consultant to establish an optimal allocation to venture capital, deciding that 5 per cent was appropriate,” Di Leva said.
However, he said for now the Harbour fund will avoid international fixed income as “we couldn’t find a global bond solution that was overly compelling [impact-wise]”.
Di Leva said the $7.5 billion investment manager had also developed further in-house tools and “extended our relationship with ISS [Institutional Shareholder Services]” to measure the fund’s performance against the SDG impact goals.
ISS is one of the biggest corporate governance and proxy voting companies in the world.
“We will also have our impact committee in place in January with some independent members to review portfolio decisions,” he said. “There’s always a grey area in what investors mean by inpact and the committee will help clarify that.”
According to Di Leva, the sustainable investing market in NZ has advanced quickly compared to five years ago when he first helped build ethical strategies for “faith-based clients” under his previous employer, Mercer NZ.
“There was no impact then, it was mainly about exclusions,” he said. “But I’m pleased to see there are more options now and lower fees.”
The Harbour Sustainable Impact Fund carries a retail sticker price of 1.2 per cent but can “flex” on fees for wholesale clients, Di Leva said.
He said a couple of KiwiSaver providers were considering the impact strategy for inclusion as well as advisory groups. Retail clients need to invest at least $100,000 to go direct but the fund will also be available for lower minimums on InvestNow and the in-development Flint Wealth (part-owned by Harbour) when that platform launches.
The fund has been seeded with about $1.5 million from the “Harbour balance sheet” and staff, Di Leva said.
To date, impact investing in NZ has typically focused on smaller direct projects such as social housing, funded by community trusts either in-house or through a handful of specialist third-party funds.
ASB broke the mould in 2019 with the launch of the Positive Impact Fund (built by Mercer) that invested largely in global listed assets – albeit in a move slammed as tokenism by sustainability purists.
But Di Leva said the “impact first” approach runs the risk of not attracting enough capital to help solve the targeted non-financial issues.
“Impact has to be scalable to be successful,” he said.
Last week Australia-based manager, Artesian, also marked a new chapter in the regional impact story, closing the first tranche of a planned A$100 million venture capital fund targeting female-led start-ups.
Artesian recently hired former Westpac corporate debt head, David Fendall, as its first NZ employee. According to the Artesian website, as NZ managing director, Fendall is responsible for the manager’s “debt, venture capital and impact investment activities” this side of the Tasman.
Artesian is also represented in NZ by third-party specialist fund distribution business, Zanoma Investment Partners.