CERTIFICATION QUARTERLY APRIL 2016

Transcription

1 CERTIFICATION QUARTERLY APRIL 2016 RIAA recently re-launched our 10-year old Responsible Investment Certification Program after a detailed review and update throughout You can read more about the relaunched program via our recent blog post here. As a part of this re-launch, we re introducing a new Certification Quarterly Report a snapshot update of RIAA s Certification Program aimed at keeping our Members informed about the latest developments in our Certification Program, with a focus on newly certified products and advisers. This Quarterly Certification Report is in response to feedback that many of our members are keen to hear more about investment products as they become available and to be kept up to date on the new, emerging and updated responsible and ethical investment options that have been assessed and certified by RIAA. We invite your feedback and ideas to info@responsibleinvestment.org

2 INDUSTRY TRENDS As at today, RIAA have 80 certified investment products from 30 investment organisations within our Certification Program. This solid growth in the number of responsible and ethical investment offerings mirrors our view that the market is going through a period of rapid maturing off the back of growing demand for responsible investments. As the market matures, we are starting to see solid responsible and ethical investment offerings: across all asset classes (including cash and fixed interest) new options for New Zealand (including KiwiSaver options) new categories such as ETFs, SMA, LICs new offerings such as impact investment funds, smart-beta funds and green property funds as well as whole superannuation funds. This rapid diversification in the types of products seeking program entry is great for our financial adviser members looking for choice and new products for their Approved Product Lists, and great for others looking to invest responsibly. For a full list of certified products and funds visit our web pages here. ISSUER PRODUCT/FUND NAME Fixed Interest and Cash Altius Asset Management Altius Sustainable Bond Fund Australian Ethical Investment Australian Ethical Fixed Interest Fund Australian Ethical Cash Fund Teachers Mutual Bank TMB Debt Issuance Program UCA Funds Management UCA Enhanced Cash Portfolio Uniting Ethical Enhanced Cash Trust Separately Managed Accounts Ethical Investment Advisers Ethical Investment Advisers Mid-Cap Separately Managed Account DNR Capital Australian Equities Socially Responsible Portfolio Exchange Traded Funds Russell Investments Russell Australian Responsible Investment ETF UBS Social Impact Products Community Sector Banking UBS IQ Australia Ethical ETF UBS IQ MSCI Asia APEX 50 Ethical ETF UBS IQ MSCI Europe Ethical ETF UBS IQ MSCI Japan Ethical ETF UBS IQ MSCI USA Ethical Social Impact Deposit Account WHAT S NEW WITH THE CERTIFICATION PROGRAM We ve just awarded the first superannuation fund (whole of fund) certifications, as a new category of certification. This new category sets a very high benchmark for superannuation funds to demonstrate their leadership in responsible investment. Specifically the funds are required to: Manage over 75% of the fund s assets under at least two responsible investment strategies (such as screening, plus ESG integration or other) Disclose their full portfolio holdings by 1 July at the latest, and update every six months Employ other active ownership strategies such as corporate engagement and proxy voting

3 Be active in advocating for more responsible financial markets Provide education to members about their responsible investment strategies (among other criteria). Our first three certified superannuation funds (whole of fund) are: Australian Ethical Super Christian Super Local Government Super. To discover more about the requirements for this category, click here. WELCOME TO NEW ADVISERS Over the Christmas break and into the first quarter of 2016, we welcomed the following financial advisers to the Program: Paul Benson, Guidance Financial Services, Essendon, Victoria Nat Chell, Charter, Sydney, NSW. NEW CERTIFIED INVESTMENT PRODUCTS The Program now boasts more than 80 products from 30 different investment organisations from Australia and New Zealand you can find them all on our Certification website. We welcome the following products to RIAA s Certification Program. MARKET ISSUER PRODUCT NAME Fixed Interest and Cash AU Australian Ethical Investments Australian Ethical Cash Fund AU Altius Asset Management Altius Sustainable Bond Fund Diversified NZ AMP Capital NZ Responsible Investment Leaders NZ Shares Fund AU Australian Ethical Investments Australian Ethical Emerging Companies Fund NZ Grosvenor Investment Management Grosvenor Investment Series SRI Conservative Grosvenor Investment Series SRI Balanced Grosvenor Investment Series SRI High Growth Exchange Traded Fund Russell Investments Russell Australian Responsible Investment ETF UBS UBS IQ MSCI Australian Ethical ETF UBS IQ MSCI Asia APEX 50 Ethical ETF UBS IQ MSCI Europe Ethical ETF UBS IQ MSCI Japan Ethical ETF UBS IQ MSCI USA Ethical ETF UBS IQ MSCI World ex Australia Ethical ETF Super Fund (Whole of Fund) AU Australian Ethical Super Australian Ethical Super AU Christian Super Christian Super AU Local Government Super Local Government Super Super Option AU Future Super Future Super Future Super Pension Plan NZ Grosvenor Investment Management Grosvenor KiwiSaver Scheme SRI Balanced Grosvenor KiwiSaver Scheme SRI Growth

4 CERTIFIED FUND IN FOCUS Through our certification web pages and the forthcoming Certification web-tool, we are profiling all of our certified products. In addition, in each edition of this Report, we will profile one of our Certified products in detail. Altius Asset Management s Sustainable Bond Fund is a diversified fixed interest fund comprising government and company bonds with an active and diversified strategy. What sets the fund apart is that it has a two stage ethical screening process involving a negative screen based on many key ethical investment themes (such as armaments, uranium, gambling, tobacco, thermal coal among others) as well a sustainability ranking overseen by CAER ratings and a sustainability policy and advisory committee. RIAA spoke with Gavin Goodhand, Senior Portfolio Manager at Altius Asset Management. Why did Altius decide to create this product? In a well-diversified portfolio, investors should have an exposure to bonds. Bond exposure provides diversification benefits when equities are under performing. Unfortunately, there are limited investment options available to investors looking for an ESG managed fixed interest investment. To address this gap, we worked closely with two ESG-aware clients to build the fund. The objective was to offer investors the opportunity to access a diversified Australian fixed interest portfolio that aligns with investors personal and social values but without compromising investment returns over the long term. What s the philosophy that underpins investment? In addition to providing investors with an ESG overlay, we aim to provide a compelling alternative to a standard bond portfolio, capturing the upside of the bond market, while avoiding returns less than cash in a rising rate or deteriorating credit environment. What ethical screens (negative and positive) are applied? We apply two responsible investing screens across our product. We start with a negative (primary) screen of our corporate universe, excluding companies that are involved in any of the activities to be avoided in line with our Sustainable Investment Policy. Following this, a sustainability rating (secondary) is assigned to the remainder of the listed corporates. This allows us to assess the suitability of each investment for potential inclusion in the investment universe. Are there any other ethical/sri process besides screening? Aside from our ESG screening, we have a Sustainable Investment Committee which provides a forum in which issues around sustainability are discussed. The Committee also provides further insight into how ESG issues may impact our investment universe and is responsible for ensuring the fund s Sustainable Investment Policy reflects the issues of most concern to the fund s investors. Can you tell us a bit about the portfolio management team, their interests and experience? Altius was formed five years ago with partner Australian Unity. The investment team is made up of Bill Bovingdon (CIO), Chris Dickman, Gavin Goodhand and Vanessa Thomson, each with over 20 years of investment experience.

5 Is there a wholesale fee option; if so what balance is required? The product has one level of wholesale pricing with the management fee being 0.55% and a recoverable expense of up to 0.10% and mandate fee pricing can be provided on request. How has the product performed to date? To the end of February 2016, the fund had returned 4.2% p.a. after fees since launching in November What are the allocations, holdings and other portfolio information? The fund is a diversified fixed income fund. We continue to believe there will be further improvement to the global growth largely led by the developed world; as such the interest rate risk in the portfolio remains short dated. With the recent widening of corporate spreads we believed significant opportunities were made available. We hold overweights in Industrials preferring the property trust sector and financials with a focus on domestic banks. Other than investing via Australian Unity, how else is the product available? The fund is currently on Bendigo SmartOptions, EmeraldWrap, Hub24 and Netwealth. Important information about the Responsible Investment Certification Program: The Responsible Investment Certification Program is not designed for the purpose of providing personal financial product or investment advice. The Certification Program is designed to provide information solely on the responsible and ethical investment strategies that apply to each of the Certified investment products for information only. The information provided by the Certification Program is not a recommendation to invest in any investment products. It does not take into account your particular investment objectives, financial situation or investment needs all of which should be considered prior to making an investment decision. You should seek professional financial advice before making any investment decision.