Australian Ethical has proven it isn’t just a green-washed label, with its Australian Ethical Australian Shares Fund the recipient of the Responsible Investments award at this year’s Money Management Fund Manager of the Year Awards.
The fund’s portfolio manager, Andy Gracey, told Money Management that the firm extensively screens its domestic equities universe, making the team sector specialists, and giving it an advantage over generalist managers who invest more widely in the market.
“Our stocks are extensively screened for ethical considerations against Australian Ethical’s Ethical Charter, which has guided our investment process for more than 30 years,” Gracey said. “It’s this marrying of the most comprehensive ethical assessment process in the market with fundamental bottom up stock analysis and conservative portfolio construction that has driven investment performance over the years.”
The Ethical Charter Gracey referred to is a set of 23 principles which determine the fund’s investment universe, and the investment team works hand-in-hand with the in-house ethics team, employing both positive and negative screens, to rule out negative companies and industries, and proactively seek out companies and sectors that do good.
“Our robust ethical assessments draw on all Ethical, Social, and Governance [ESG] considerations going beyond ESG criteria alone.” He said. “Using our positive screens, companies are selected for the benefits their products and services provide and for the responsible management of their social and environmental impact.”
And the ethical managers have put their money where their mouth is, having recently divested from AMP and IOOF for failures to meet ethical standards, while the renewable energy and technology sectors have received some attention from the firm.
“We have been long-term shareholders in the renewable electricity generators/retailers out of New Zealand and have built a position in Australian wind energy company Infigin Energy more recently,” he said. “We are firm believers in a future powered by renewables.”
“As the world transitions towards a more sustainable economy, companies that enable this shift are likely to experience significant structural growth,” Ted Franks, Pengana WHEB fund manager, said.