Socially Responsible Investment (SRI) Fund Launched
27four Investment Managers has launched a socially responsible invest fund, the 27four Kunye Fund.
27four MD Fatima Vawda said that social responsible investing (SRI) is defined as investment that combines investors’ financial objectives with their commitment to social concerns, such as social justice, economic development, peace or a healthy environment.
“This definition is open to interpretation, and often adapted to issues unique and specific to countries, like poverty alleviation, HIV/AIDS, employee relations and infrastructure development in SA for example,” she said.
In essence, SRI refers to a group of investment mandates and products that in one way or another take into account ESG: namely environmental, social and governance factors.
“We have formulated a solution for retirement funds that addresses SRI, yet endeavours to deliver long-term capital and income growth without sacrificing returns,” she said.
Vawda said highly experienced SRI asset managers have been selected and carefully blended to satisfy the three SRI investment criteria of ethical screening, shareholder activism and community investment.
“Our aim is to consistently deliver returns in excess of the SRI benchmark on a rolling 3-years basis of 50% ALBI and 50% SWIX.”
“We are proposing that retirement funds commit no less than 10% of their overall portfolio to SRI. In this case retirement funds would transition a portion of their local equity and a portion of their local bond allocation to the SRI portfolio to remain Regulation 28 compliant,” she said.
At the launch, John Oliphant, head: investment and actuarial of the Government Employees Pension Fund (GEPF) said SRI should be a mainstream activity rather than a fringe investment.
“The rules of the SRI game are: be profitable; grow only where you can create value; pay people fairly to do the right thing; and treat customers, suppliers, workers and communities fairly. Also stay out of partisan politics by not seeking to influence regulators,” he said.
The GEPF has assets just under R700-billion representing 1,2-million members and 328 000 pensioners and beneficiaries. GEPF holds 17% of Sasol, 15% of Standard Bank and 5% of Anglo American.
Andrew Canter, chief investment officer at Futuregrowth, said, “SRI in the developed world tends to focus on greenhouse gases and governance, while in developing countries it's about basic services such as water, electricity, roads, housing and telecoms.”
He said there is no SRI standard and it is therefore open to different interpretations. "SRI is a theme and must fit into a strategic asset allocation. It is a moving target, subject to fads and fashions, and there are different views from different investors. For example, micro-finance has both strong supporters and detractors. The core rule of SRI is in essence avoiding harm and doing good.”
Canter highlighted that inSouth Africa, SRI managers have robust track records in achieving returns above market benchmarks, adding: “No investor should compromise returns in order to achieve social goals”.
He said the Futuregrowth Infrastructure and Development Bond Fund, launched in 1994, has its highest percentage holding, 55%, in infrastructure development and social services. The next highest category is in consumer and business access to finance at 17%, while BEE stands at 8%.
He said the Futuregrowth Infrastructure and Development Bond Fund, launched in 1994, has its highest percentage holding, 55%, in infrastructure development and social services. The next highest category is in consumer and business access to finance at 17%, while BEE stands at 8%.
