Responsible investor wins consistent alpha
The Lonsec/Money Management Fund Manager of the Year Award for responsible investment has gone to Perpetual’s Wholesale Ethical SRI Fund.
Lonsec said the fund had captured the market’s attention as the best-performing Australian equity fund in all categories for 2012.
“While an impressive year, it is no fluke, with the manager also generating considerable alpha over medium- and longer-term horizons, putting to bed the old chestnut that ethical investors forgo performance for the feel-good factor,” Lonsec said.
Portfolio manager Nathan Parkin said Perpetual had achieved 35.9 per cent over 12 months to the end of March, compared to the ASX300 benchmark of 19.2 per cent.
He equated the fund’s performance with the depth of the investment team and Perpetual’s consistent approach to investing.
Lonsec commended the fund’s investment approach, noting it combined a traditional ethical screening approach with Perpetual’s company research discipline built on quality and valuation.
Although it was strict, the fund used a very common-sense approach to investing, according to Parkin.
“The key elements to it are: we meet with companies and have to understand the company; we look at the balance sheet and if it’s got too much debt we won’t invest, which goes to downside protection; and the business has to make money and be a good franchise,” said Parkin.
“The ethical screen comes on top of that and if we sense there’s an opportunity with value, we look further.”
The team had been consistent for the past 12 months and were individually accountable for the work they produced, according to Parkin.
“Each portfolio manager has their own fund to run, so it really comes back to individual accountability - and that extends to the way our research works in that all the analysts are responsible for their own performance,” he said.
Australian Ethical’s Smaller Companies Trust gained a place as a responsible investing finalist.
Australian Ethical managing director Phillip Vernon said the company did not view ethics as just another product.
“Ethics is in our DNA as a company,” he said.
Vernon said the company gave equal weighting to both the values and financial analysis of stocks in its investment process.
Investors had become more aware of ethical issues such as climate change, Vernon said, which had presented planners with a business opportunity.
Alphinity principal Bruce Smith said its Socially Responsive Investment Fund, another finalist in the responsible investments category, had achieved good performance through its stock selection process which used a fundamental analysis and quant overlay.
He said Alphinity was as concerned with avoiding losing investors’ money as making it.
“You can’t invest in non-sustainable stocks because one day it will happen that factors make them unsustainable and that will impact on valuation,” he said.
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