The former-Pengana portfolio managers that left in March this year have launched their own responsible investment funds management business, Pella Funds Management.
Speaking to Money Management the fund’s chair and chief investment officer, Jordan Cvetanovski, said after working for numerous fund managers in the past he wanted to create a business that incorporated all the things he believed worked in a successful fund.
One of the key attributes, he said, was important was the culture and that a founder-led, employee-owned fund manager had many advantages.
“We've deliberately set up Pella in order to align the employees interest with the clients interest. When the owners of the company are the employees and investors as is in our case, we have an alignment of interest and we don't have short-term commercially minded stakeholders that could govern the way you conduct business or the way you even ultimately manage money,” he said.
“We will act according to what we see in the markets and reflect that exactly in the way we invest.”
Cvetanovski said the business structure also allowed the fund to set its fees in a way that had a long-term focus and in turn was best for clients.
He said the fund had competitive fees and did not believe that people needed to pay a premium for responsible investment.
The Pella Global Generations Fund had a 0.35% management and costs fee and 20% above benchmark performance fee.
“We feel the only way you can truly deliver on a long-term, responsible investment kind of goal or sustainable investment aim is to have the company reflect the principles and kind of the ethos of the funds and vice versa,” Cvetanovski said.
“You can't have, in our opinion, a company that has a multitude of funds that do very different things. One does coal mining and the other fund does positive impact investing, and then expect the investor to feel as though they've made an impact by investing in the positive impact fund when all those proceeds funnel through all the other kinds of funds.”
Pella head of distribution, Joy Yacoub, said four questions financial advisers should ask a responsible investment manager were:
- What was the fund manager’s sustainability rules and processes?
- What were the fund manager’s financial requirements?
- Is the fund manager transparent?
- What were the fees?
Cvetanovski said investing in a firm that made profit from harming the environment no longer made sense and that investors needed at a minimum to decide on whether the fund was a place they wanted to invest their money in.
“Then they need to ask: How much am I paying for this? Are you also a good manager of capital? Can you make me money? Can you generate wealth? Do you care about how you get to your end points?” he said.
“The other thing is asking whether the manager is concerned about the volatility and risk? Investors are not seeing what the fund manager is doing and they don’t want to wake up one day and see unbearable volatility.
“Yes, you might get me there in five years but I don't want to have lose too much sleep over it and so all these things for me matter as a personal investor.”