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Fund managers angry at poor grades

Fund managers have hit out at a new KiwiSaver switching platform, which has awarded them dismal grades for their ESG work.

Friday, September 21st 2018, 6:00AM 2 Comments

The new site, BetterSaver, aims to offer KiwiSaver members an ESG grading for each fund.

It also provides a mechanism to switch.

Founder Joe Taylor said providers had so far been able to claim they considered ESG matters, "but there has not been the ability to independently verify the truth or extent of their ESG commitments". 

Responsible investment consultant and financial adviser Rodger Spiller helped to develop BetterSaver's framework.

Funds are graded against the manager's transparency about where money is invested, exclusions, inclusions, engagement and the manager's memberships and research.

But KiwiSaver funds have so far performed dismally.

The platform awards a grade between A and F and the entire industry has received a grade of C+ or below. Many managers received an F grade. including big names such as AMP and some of Booster's funds.

Booster chief investment officer Davide Beattie said it was not a fair representation of the industry.

“It depends what he’s trying to achieve. If it’s to show what people are actually doing, that’s not a fair representation. If it’s to assess how good they are at communicating that, that’s all it’s ended up doing. And I’m not sure that’ something the rating system should be focusing on.”

He said it needed to look at the substance behind the investing decisions being made, not just how those were communicated to consumers.

Asking set questions of managers would give a clearer picture, he said.

“I don’t think it improves things. It sets the industry back a bit… more engagement with the industry would have been a whole lot better.”

Beattie said it highlighted the limitations imposed on managers' communications with clients.  What could be communicated in a PDS and offer document was very limited because of the templated requirements, he said.

People were not turning to the Disclose register for more detail. "It’s not easy to find. People don’t know it’s there.”

Beattie said it would be useful to have an industry platform to filter information to the public and lift overall awareness. But that was not an easy task. Internationally, ESG researchers came up with different grades for the same company.

"It's a very complex issue, and very personal. Therein lies the challenge that we are all facing. He needs to dig deeper and hopefully he does that."

 

Tags: Booster KiwiSaver responsible investing

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Comments from our readers

On 21 September 2018 at 11:20 am Pragmatic said:
I have reviewed the BetterSaver website and it is an amateur attempt to squeeze a buck from an unsuspecting audience.

Mr Taylor may be better suited back in the Events and Marketing industry
On 21 September 2018 at 12:46 pm Steven Popodopolus said:
...Its 100% independent though.

Or is it?

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