Ethical investing is a growing segment for clients but there remains a paucity of quality offerings in the market, according to the Legg Mason affiliate, Martin Currie.
Martin Currie Investment Management’s portfolio manager, Will Baylis, said: “When we developed the Legg Mason Martin Currie Ethical Income Fund in 2015, we did so in direct response to our clients who asked us to combine the investment objective of our successful income fund with a set of ethical values”.
“The fund has been successful for several reasons including our strong track record in managing our equity income fund since 2010 and the clear design of our fund that combines an integrated ESG [environmental, social, and governance] assessment in our research approach with a set of rigorous ethical screens,” he said.
Baylis said the fund invested only in Australian Securities Exchange (ASX)-listed stocks and utilised the same underlying investment process that had successfully driven a proven equity income strategy. The company also plans to add a second ethical income fund to its range in response to client demand for some alterations to its screening approach.
Ausbil Investment Management’s head of distribution, Mark Knight said the key components of its Candriam Sustainable Global Equity Fund comprised of sustainable research and actively managed qualitative stock-picking models, and stressed that the fund sought companies that were “global leaders or best in class in relation to the ESG characteristics”.
“It’s a combination of two things: number one, the very robust, world-class sustainable research, and number two, very comprehensive, actively managed quantitative stock-picking models,” Knight said.
Australian Ethical Investment domestic equities portfolio manager, Andy Gracey, said that the biggest challenge in the coming year would be how economies handled rising interest rates and geopolitical risks.
“With respect to the Australian Shares Fund, identifying companies at acceptable valuations is proving to be challenging,” he said.
“However, the backdrop of low historical interest rates continues to remain supportive for equities in 2017. While we have recently had relatively calm equity markets we expect greater volatility looking forward.”