Terra Capital removes ethical from fund name
The former Terra Capital Ethical Emerging Companies fund has chosen to remove the word ‘ethical’ from its title in light of its investment in cannabis companies.
The fund, which was launched in January 2016, is now known as the Emerging Companies fund after a name change in May.
It was awarded an ethical certification by the Responsible Investment Association of Australasia (RIAA) last year, one of only 14 funds, but has since returned that.
The reason for the change was the firm’s holdings in cannabis companies, specifically those for recreational purposes. While some cannabis companies are working for medicinal purposes, whether the fast-growing sector can be held in ethical funds still remains a ‘grey area’.
Following a trip to North America earlier this year, the fund is holding 36 per cent in cannabis companies, up from 20 per cent in February.
In its monthly newsletter, the firm said: “Our research confirmed our investment thesis from the first half of 2018 which is that access to US customers through premium brands will lead to the highest margins. A new focus for the fund over the past quarter has been Health and Wellbeing CBD products–following our trip we expect this will be a bigger market than the recreational cannabis market. Given the current market fragmentation we believed both these investment themes are still in their infancy.”
Despite the name change, the firm still maintained an overall ethical approach to fund management which included negative screening to avoid companies such as defence, gambling and human rights violators.
AUTHOR
Laura Dew
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