A number of funds have been rolled out in New Zealand, but inflows to date have been slow.
Tower Asset Management business development manager Mel Hewitson says growth in SRI has been quite slow and lagging international experience, including Australia in terms of awareness.
Mark Bytheway, chief executive of the Sustainable Investment Research Institute in Australia, says some of the reasons for this slow growth include the structure of the New Zealand market and economy. For instance New Zealand does not have listed companies which operate in the so-called bad industries like resources and mining.
Likewise there is no legislative push towards SRI, as there is in Australia and the United Kingdom. Governments in both these countries have introduced legislation which forces fund managers to address SRI investment issues.
Bytheway, who was speaking at a recent IIR-organised funds management conference in Wellington, says that although New Zealand was lagging the world in the SRI sector it is “reasonable to suggest” investors will follow international trends.
One of the big questions on investors' and advisers' minds when it comes to SRI is: Will I have to trade off returns for values?
Bytheway says there is “no convincing evidence that SRI will underperform.”
The latest piece of research on SRI investment strategy performance comes from AMP Henderson, Bytheway says. That in-house research found that although results vary between managers, overall outcomes tend to be neutral to positive in favour of SRI strategies.
Another report, out of Canada last year, also showed that on average SRI funds are neither giving up anything nor gaining anything in terms of financial returns.
However, it appears that the screens may actually decrease risk exposure.
People wanting to learn more about SRI Investment can attend a special conference in Auckland in May. The conference, which is part of a United Nations Environment Programme Finance Initiatives, is being held on May 20-21. It is designed to appeal to fund managers, financial planners and institutional investors. For more information check out the Good Returns diary, or email Mel Hewitson
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