Resource exclusions help Perpetual win SRI gong

Perpetual Investments has won the plaudits of Australia’s ethical investment community, having taken out an award for best socially responsible investment (SRI) fund for 2005.

Perpetual’s Ethical SRI fund was praised at the 5th annual Australian Sustainability Awards in Victoria last week for offering strong returns to investors while maintaining a strict “true to label, almost deep green” screening procedure.

Many stocks that have been benefiting from booming commodities markets, like BHP Billiton and Rio Tinto, are excluded from the fund. Nevertheless, it still managed to return 24 per cent to investors in 2005.

The fund has also outperformed the ASX300 benchmark over the last three years, with a 21 per cent return, and is one of 10 funds to receive the Ethical Investment Association’s SRI recognition symbol established three months ago.

Perpetual chief investment officer Emilio Gonzales said up to 40 per cent of the manager’s equivalent mainstream fund, by value, is not included in the SRI version.

“We have been guided by three principles, and the first is the screening process. It is important that we have a high burden of proof and a high bar and we don’t want to shortfall on that analysis.

“Secondly, returns do matter. Investors don’t want to sacrifice returns for making an ethical investment choice. They still want to invest in companies that outperform.

“Then thirdly, we make sure there is a diversified spread of investments.”

Companies other than BHP and Rio Tinto included in Perpetual’s mainstream Australian equities fund, but not in the SRI fund, include materials company Rinker, BlueScope Steel, CSR, Boral, Iluka, packaging giant Amcor, and gambling companies Tabcorp and PBL, which owns the Crown Casino.

“The two key areas that companies fall short in are either environment or human rights. BHP, for example, has been excluded for uranium mining associated with the WMR acquisition,” Gonzales said.