The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.
The private markets juggernaut is one that has also thrown up a wealth of data that other players can use to sharpen up due diligence when making their own investment decisions – especially in the growing secondaries market.
Australian Ethical broadens mandate
Australian Ethical, one of the leaders in ethical superannuation and investments both domestically and around the world this week flagged a change to their ‘Advocacy’ fund.
Launched in 2010, the purpose of the Advocacy Fund was to invest into a diverse portfolio of Australian and overseas listed companies that met the requirements of the Australian Ethical Charter. The second core purpose was to offer the Portfolio Manager the opportunity to hold shares in companies that didn’t meet their strict requirements with a view to using these shareholders to engage with company management to ‘advocate for change’.
The fund has performed reasonably well since inception, growing 10.6 per cent versus the benchmark of 9.8 per cent, however, it had grown to only $67 million under management over this period.
With the success of the Australian Shares option seeing capital flows in that fund grow significantly, management are now seeking to broaden the mandate of the Advocacy fund, with a view to building a diversified ‘growth’ strategy.
Under the proposal, the investment mandate for the fund will expand from solely investing into listed companies to include the full suite of alternative assets. These will include unlisted property, private equity, venture capital and infrastructure among others.
It is expected the new iteration of the fund will be in a position to have a significant impact on their goal to ‘invest for a better world’, with as much as 20 per able to be allocated to less liquid assets.
According to management “the Fund will therefore allow everyday Australians to allocate a portion of their money to potentially world-changing markets such as climate technologies, renewable energies, medtech and biotech.” Many of which are simply not suited for listed equity market structures given the patience and longer time horizon required.
Recent examples of more growth-oriented investments by Australian Ethical include allocations to the Right Click Capital Growth Fund, Artesian Clean Energy Seed Fund, Main Sequence CSIRO Innovation Fund, and Morrison & Co Growth Infrastructure Fund.
The announcement comes as French business school EDHEC, highlights the risk that ‘sustainable’ passive ETFs may actually be taking capital away from companies that are central to reducing the planet’s carbon footprint.
In a recent paper, they highlighted that their was little difference between sustainable and standard benchmark indices, with many companies with ‘deteriorating’ climate credentials actually getting larger allocations as they grew larger. They also highlighted the risk of excluding sectors such as energy completely from sustainable benchmarks, which whilst reducing their carbon footprint, starved the exact companies of capital that will be imperative to any clean energy transition.
Commenting on the launch, John McMurdo, CEO and MD of Australian Ethical, said: “We’re excited to be offering a 100 per cent ethical multi-asset high growth fund, giving everyday Australians the chance to put their money towards some world-changing industries. “The launch of this Fund builds on our visionary roots and pushes the envelope of ethical investing in Australia by connecting everyday investors with transformational projects.”
