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Younger investors rate responsible investment: Fisher Funds

Talking about responsible investing is a way for financial advisers to engage with younger clients, one fund manager suggests.

Tuesday, June 27th 2017, 6:00AM 4 Comments

by Susan Edmunds

Fisher Funds operates a responsible investment policy across its equities and fixed interest investments, and recently added a ban on thermal coal producers.

Director Frank Jasper said there was a groundswell of public interest in responsible investment.

“KiwiSaver has brought a different demographic into the investment market over the last decade,” he said.

"Younger people are very engaged in this sort of thing, they want to do the right thing, invest their money and get good returns but they also want to do it in a way they feel comfortable with. It’s consistent with how they are making other decisions in life."

He said it was noticeable that clients that were traditionally sometimes hard to engage with in on investment were more interested in ESG discussions.

“When you talk about investing for retirement their eyes glaze over but with this they are interested and engaged. It’s an entree into the world of investing.”

He said that was a point that Fisher Funds highlighted to investment advisers.

Jasper said responsible investing would pay off for fund managers.

The insights fund managers could gain from ESG research would feed into the financial research that informed better investment decisions.

“Responsible investing isn’t just about excluding the worst companies which is often where people’s attention is focussed. As an active manager we go further on behalf of our clients and assess the ESG behaviour of the companies we invest in. We want to ensure our portfolio companies meet basic standards of good conduct. This is something passive funds can’t do.

“It’s an opportunity to look at a company through a different lens and make better investing decisions. It’s not just saying ’no’ all the time.”

Fisher Funds uses research from MSCI ESG Research which Jasper said enabled it to delve deeper into the information they needed.

“For us, we’ve always tended to have a quality focus in how we invest. With that we are interested in the sustainability of the business. Not just from an ethical but a shareholder perspective. If they are producing things that harm small children, for example, that’s not a good long-term business model.”

He said it was more unusual for New Zealand fund managers to apply responsible investment principles to fixed interest investments because it was easier to access data on equities and most firms outsourced their fixed interest investments.

But Fisher had out-sourced only two fixed-interest mandates and could ask its managers to avoid investments as necessary, he said.  “If you’re using a pooled product or an ETF you couldn’t make that happen.”

Tags: Fisher Funds responsible investing

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Comments from our readers

On 27 June 2017 at 7:47 am Brent Sheather said:
Ironies abound in this story. I love it when fund managers pontificate on ethics and at the same time charge performance fees on their equity products against a fixed interest benchmark. In my opinion the reason fund managers love ethical products is because it allows them, somehow, to charge higher management fees and deflects the discussion from the facts to the ethereal.
On 27 June 2017 at 9:10 am Steven Popodopolus said:
For once Brent hits the nail. Performance fees on equity funds with a fixed interest benchmark are terrible for the client.
On 27 June 2017 at 9:36 am John Milner said:
On the money as usual Brent. Performance fees: giving your fund manager permission to expose you to greater risk than you know or want, while paying more for the pleasure. A dream made in fund manager heaven.
On 30 June 2017 at 1:15 pm Selwyn said:
With AI (artificial intelligence) applications heavily advanced I can advise you that that is about to change, both from the fund management point of view and in the near future the capability of the investor to compare.

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