On the other side of the fence during the past decade we have also seen the rise in the number of intermediary firms specialising in SRI, with a shout out to Holden and Partner and EQ Investors in particular – if you have not heard of the latter then you may know their chief executive, John Spiers who set up Bestinvest in the late 1980s.
As well as a screen that identifies various levels of corporate engagement and positive selection, his fund selectors give a higher weight to those managers investing in companies actively solving the social and environmental problems we face.
Ultimately, however, it is still about performance as Daniel Bland, an investment manager at EQ Investors, explains: “We always apply our in-house quantitative screen to identify managers consistently adding value. If we are not convinced that that the extra costs of active management can be compensated by superior performance, a passive strategy is sought.
“After all, the focus is always to provide a healthy return to investors, whether they decide to opt for socially responsible investment or not. In our experience the innovative sectors offering positive environmental and social impact provide excellent investment opportunities.”
The future looks very rosy indeed for SRI investors as they have a greater choice of funds available – passive and active as well as open and closed-ended – with an increasing number of advisers to buy them through.
Here’s that magic word again…but…at a recent SRI event that International Adviser’s sister publication Portfolio Adviser hosted, more than 75% of wealth managers present said the fund choice available was either ‘ok, but improvements are needed’ or ‘there are not enough quality funds at all’.
While society, legislators, wealthy philanthropists, companies, wealth managers and their clients are all looking for more SRI-friendly investment approach, the fund groups need to work on their product offering. Or work on the communication of that product offering because if they have not spotted it yet, last year their ‘ok’ funds still attracted £715m ($1bn, €892.4m) in AUM – a record figure.
To answer the question about investors having their cake and eating it, the answer is ‘Yes, they can’. But it tastes stale right now…
