Investors go green

Ethical investing has shifted from being something which sounds like a good idea, but doesn't make money, to an option which has a valid place in a portfolio on performance grounds

Wednesday, August 30th 2000, 12:00AM

Ethical investing has shifted from being something which sounds like a good idea, but doesn't make money, to an option which has a valid place in a portfolio on performance grounds.

Two of the reasons for this are that managers have developed far more sophisticated ways of managing an ethical, or socially responsible, portfolio. Secondly, there is a growing consumer demand for such funds.

A recent survey done by KPMG in Australia said that 69 per cent of people would consider investing their super in a socially responsible fund. In the United States a survey done by the Social Investment Forum revealed the sector had experienced rapid growth reaching the $2.16 trillion mark of asset under management in 1999.

The forum's outgoing president Steven Schueth says more than one out of every eight dollars under management in the US was part of a socially invested portfolio.

The options available for New Zealand investors to partake in ethical investing are limited at present, but that is starting to change.

AMP Henderson Global Investors has started promoting a UK-domiciled unit trust in New Zealand, and its London-based marketing manager Mark Campanale is moving to Sydney early next year to set up an ethical investment business down under.

Another heavyweight of the scene, US-based PAX World Fund Family is looking at the Australasian market, and Tower Asset Management, which has a fund in Australia and is currently developing a fund for the local institutional market.

PAX representative Schueth told the Centre for Business Ethics Conference in Auckland on Tuesday that consumers are demanding these sorts of funds.

"Wall Street did not cook this thing up," he says.

Schueth says ethical investing is "a way for people to integrate their personal values into the investment decision making process."

Campanale says ethical investing has shifted away from the simplistic process of putting up negative screens and saying the fund can't invest in sectors such as tobacco, alcohol, arms, gambling etc.

Instead managers like Henderson invest in tomorrow's growth companies that have sustainable businesses.

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