Super funds look at responsible investing
Super funds can adopt responsible investing with little or no loss to short-term returns if they partner with a responsible investing implementation manager, according to Parametric.
Parametric’s research paper, “Responsible investing in a peer sensitive world” offered five ways in which super funds could adopt responsible investing while addressing peer-risk concerns.
According to Parametric’s managing director, research, Raewyn Williams the super funds should work with a responsible investing implementation manager and conduct research on how much a responsible investing idea would really impact performance.
As far as portfolio construction was concerned, risk gaps created by a responsible investing approach could be refilled by a responsible investing manager with quantitative skills.
Williams also stressed that portfolio construction was only one way that super funds could potentially promote responsible investing, with active ownership having the attraction of avoiding potential performance drag and delivering on the upside.
Further, super funds with ‘the capacity for innovative thinking and a conviction around responsible investing’ could also use their ideas to refill any potential short-term return gap left by some investing approaches.
“Fifth, our pragmatic observation is that super fund trustees who feel constrained by peer risk in relation to their default MySuper options may feel less peer-sensitive in relation to their Choice options,” Williams said.
“Longer term, there is an opportunity for super funds to consider how to free themselves altogether from peer sensitivity and short-termism, which works against true member-centricity and can constrain funds from implementing good ideas.”
AUTHOR
Oksana Patron
Recommended for you
Record flows into iShares ETFs helped BlackRock’s assets under management reach US$13.5 trillion in the third quarter, but it reported outflows from the APAC region.
Regal Partners has passed $20 billion in funds under management, helped by $723 million in net inflows during the last three months.
Global investment manager Fidante has formed a strategic partnership with a London-based asset manager to secure exclusive distribution rights across the APAC region.
Blackwattle Investment Partners has hired a management trio from First Sentier Investors – who departed amid the closure of four investment teams last year – to run its first equity income offering.
