• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer
  • Subscribe
  • Twitter
  • RSS Feed

Investment News NZ

Investment News provides financial advisers news stories from the financial industry in New Zealand. Subscribe to our free weekly newsletter.

  • Home
  • News
  • Kiwisaver
  • Subscribe
  • About
  • Advertise
  • Contact
You are here: Home / Investment News / More ethical: retro investment label returns

More ethical: retro investment label returns

July 28, 2019

Kristen Le Mesurier: AMP Capital portfolio manager

Ethical is back.

After decades spent morphing through terms such as sustainable or responsible or environmental, social and governance (ESG), the original ‘ethical investing’ label has returned to vogue.

In NZ, for example, the Pathfinder-run KiwiSaver scheme, CareSaver, launched this month under the ethical banner rather than the more modern descriptors.

And last week AMP Capital joined the retro trend after it rechristened its Responsible Leaders fund series as Ethical Leaders – a name change that portfolio manager, Kristen Le Mesurier, said would resonate better with investors.

“As an industry we get excited about things like ESG integration but average investors don’t necessarily understand it,” Le Mesurier said. “But ordinary people absolutely understand what ethical investing means.”

Although ‘ethical’ remains a highly-loaded and subjective term, she said for AMP Capital it represented a “line in the sand” that clearly shows what sectors the funds avoid.

Rebekah Swan, AMP Capital NZ ESG investment specialist (a title she took on this March), said the funds were “increasingly focused on ethical investment considerations”.

“What’s most important is that ethical and ESG funds remain true to label, and we firmly believe this is achieved through transparency of three critical components – the investment approach, the return objective, and the disclosure of each holding in the fund,” Swan said. “This allows investors to understand what they are invested in and where the fund sits on the ESG, ethical and impact investing spectrum.”

To date, the AMP Capital Ethical Leaders funds have cut out a number of sectors such as controversial weapons, tobacco and fossil fuels.

In April this year the manager also narrowed down the number of energy stocks in the portfolio after redefining income cut-off parameters.

“The tightening of our fossil fuel screen from 20% to 10% revenue threshold, means the Ethical Leaders funds will be invested in fewer mining and energy companies globally,” Swan said. “We continue to exclude all companies that make a material amount of money from the most carbon-intensive fossil fuels.”

Le Mesurier said the AMP Capital ethical investment committee was also mulling over further negative screens over factors including animal welfare, nuclear energy and manufacture of civilian firearms.

But she said while most investors shared some common ethical investment sentiments – cluster bombs and tobacco, for example, are easy sells – as the potential exclusion list expands, consensus might prove more difficult.

“With issues like animal welfare, for example, there are many different perspectives among our investors,” Le Mesurier said.

She said AMP Capital regularly meets with the funds’ large investors (mostly big superannuation funds in Australia) to gauge the latest ethical concerns.

All stock-screening ideas filter through AMP Capital’s ethical committee (which meets three times a year) as well as the broader investment team. This year the group is also adding a new input with a trans-Tasman Youth Advisory Committee that will feed into the decision-making process.

The youth group will include about 10 members, mostly sourced from universities. Le Mesurier said contenders for the committee would likely have some interest in ethical investing already.

Whether the next-generation ethical concerns will take the negative screening to the next level remains to be seen.

“We haven’t yet had an issue that we were not able to implement from an investment perspective,” she said.

However, Le Mesurier said cutting sectors in the name of ethics could ultimately destablise the risk-return relationship.

“I could see a time when the sheer number of exclusions means it’s not possible to still deliver benchmark-comparable returns,” she said.

At current exclusion levels, though, Le Mesurier said the AMP Capital ethical funds should still be able to deliver comparable returns over the long term without taking on excessive sector risk.

“But I think you need active management to maintain comparable returns,” she said. “It’s a lot harder for passive managers.”

If index funds carve out more sectors to compete in the ethical space they inevitably veer off the broader benchmark – introducing volatility – without the risk-rebalancing tools available to active managers, Le Mesurier said.

She said ethical funds need to be judged on traditional investment metrics – risk and returns after fees – not just on the scale of their exclusions.

Print Friendly, PDF & Email
Twitter0
LinkedIn0
Google+0
Facebook0

Read More » Investment News

Recent articles

  • Funds management chief vacancy opens up as ANZ divides wealth and private bank April 18, 2021
  • Regulator reasons on fees April 18, 2021
  • Two more Cs for MMC; Fisher CIO scales back but trucks on April 18, 2021
  • Milford adds $1.3bn in December quarter, breaks $10bn barrier April 18, 2021
  • Member admin shake-up as FNZ enters Aussie fray April 18, 2021
  • Government bond manager gets fingers in NZ PIE April 18, 2021
  • Nay-sayers emerge in ESG trend research April 18, 2021
  • Climate change legislative journey begins for NZ financial sector April 18, 2021
  • Hong Kong manager seeks Australasian insto money, assets for new mortgage fund April 18, 2021
Finished reading? Why not subscribe? To receive a weekly email enter your email address here.

Primary Sidebar

WEEKLY NEWSLETTER

Sign up here to receive our weekly newsletter.
Learn More »

Investment News

  • Funds management chief vacancy opens up as ANZ divides wealth and private bank April 18, 2021
  • Regulator reasons on fees April 18, 2021
  • Two more Cs for MMC; Fisher CIO scales back but trucks on April 18, 2021
  • Milford adds $1.3bn in December quarter, breaks $10bn barrier April 18, 2021
  • Member admin shake-up as FNZ enters Aussie fray April 18, 2021
  • Government bond manager gets fingers in NZ PIE April 18, 2021
  • Nay-sayers emerge in ESG trend research April 18, 2021
  • Climate change legislative journey begins for NZ financial sector April 18, 2021
  • Hong Kong manager seeks Australasian insto money, assets for new mortgage fund April 18, 2021
  • Salt diversifies with another AMP Capital hire April 14, 2021

Search by Keyword

Most Recent Investment News

Funds management chief vacancy opens up as ANZ divides wealth and private bank

April 18, 2021

Regulator reasons on fees

April 18, 2021

Two more Cs for MMC; Fisher CIO scales back but trucks on

April 18, 2021

Milford adds $1.3bn in December quarter, breaks $10bn barrier

April 18, 2021

Member admin shake-up as FNZ enters Aussie fray

April 18, 2021

Investment News Archive

Most Popular Articles

  • NZ share-trading splurge could trigger tax alarms… posted on October 5, 2020
  • Westpac NZ flags retail advice sale to Forsyth Barr posted on October 19, 2020
  • Flint set to spark platform competition posted on August 17, 2020
  • The horror year in technicolour: free KiwiSaver 13 report released posted on September 30, 2020
  • Four to the core: Smartshares to expand, rearrange and reprice ETFs posted on June 22, 2020
  • NZ Funds directors back on board posted on April 24, 2016
  • Kitset KiwiSaver scheme set to unwrap in spring posted on April 27, 2020
  • Kiwi Wealth hits the bigger time posted on November 26, 2017

Sponosored Content

Responsible goes retail: why Mint has opened the SRI tin

David-Boyle

Jumping lessons: what all investors can learn from GameStop loss

What do ‘Kiwi’ experts see for 2021?

David-Boyle

On the industry play-list: four chart-topping regulations for 2021

Quick-links to Popular News

  • FAP Compliance
  • Coronavirus
  • New Appointments
  • Financial Markets Authority (FMA)
  • Kiwisaver
  • Climate Change
  • Crypto Currency
  • Blockchain
  • Insurance

Secondary Sidebar

Recent News

  • Funds management chief vacancy opens up as ANZ divides wealth and private bank April 18, 2021
  • Regulator reasons on fees April 18, 2021
  • Two more Cs for MMC; Fisher CIO scales back but trucks on April 18, 2021
  • Milford adds $1.3bn in December quarter, breaks $10bn barrier April 18, 2021
  • Member admin shake-up as FNZ enters Aussie fray April 18, 2021
  • Government bond manager gets fingers in NZ PIE April 18, 2021
  • Nay-sayers emerge in ESG trend research April 18, 2021
  • Climate change legislative journey begins for NZ financial sector April 18, 2021
  • Hong Kong manager seeks Australasian insto money, assets for new mortgage fund April 18, 2021
  • Salt diversifies with another AMP Capital hire April 14, 2021

Footer

Copyright ©2020 InvestmentNews.co.nz — All Rights Reserved ·— Terms & Conditions