KEY POINTS:
KiwiSaver's First socially responsible investment fund is set to launch this month, with its ethical approach to money-making being touted as the answer to making money without wrecking the planet.
The new KiwiSaver fund will be run by Asteron NZ, part of Suncorp-Metway, a $22 billion Brisbane-based investment
manager.
It already has an ethical unit trust product in its portfolio, and it is hoping the introduction of one to new KiwiSaver clients will raise the local profile of this kind of investing.
"I think the world is running very much in the direction of ethical and socially responsible investment," says Asteron investment products manager Rod College. "When the prospectus is registered, we will be leading the charge. There is huge interest in ethical funds for KiwiSaver."
According to College, Finance Minister Michael Cullen focused fund managers' minds in the last Budget when he said that KiwiSaver fund managers will have to disclose their approach to ethical investing.
For many, the introduction of Kiwi-Saver will be the first chance that New Zealanders will have an opportunity to voice their opinions on socially responsible investment, in relatively large numbers.
College says the company's socially responsible unit trust has performed "slightly better" than its counterparts, but he stresses: "It has got to make sense financially."
He says responsible funds will be able to exercise influence over NZ companies in time.
The Asteron funds are managed by sister company, Tyndall Investments, and most of the socially responsible fund's stocks will be on the NZX50.
Most SRI (socially responsible investment) funds rule out investing in companies which deal in gambling, tobacco and alcohol. Those investing in armaments and uranium mining are also screened out.
Asteron is being advised by ethical investment mentor Rodger Spiller, the New Zealand director of the Ethical Investment Association Australasia. Spiller has developed his own set of guidelines to measure a company's socially responsible performance.
Following Cullen's announcement, Spiller says the Ethical Investment Association believes the New Zealand guidelines on responsible investing for KiwiSaver providers ought to be based on the Australian guidelines.
Russel Norman, the Green Party co-leader, greeted Asteron's news with excitement last week. He has been polling New Zealand's KiwiSaver providers on their intentions to offer ethical funds but has not had much of a response.
"I think the key thing is to make the argument about why it is important for companies who do good things to get capital, and trying very hard for companies who do bad things not to get capital."
AMP Capital Investors, the wholesale arm of AMP, said last week that it was also well-positioned to provide a socially responsible option for institutional KiwiSaver provider clients. The company's Anthony Edmonds says he is talking to KiwiSaver providers about its AMP Capital "Responsible Investment Leaders International Shares Fund" which will be available to retail investors as a portfolio investment entity from October 1.
AMP Capital Investors is investment manager for AMP Financial Services, Mercer and the ASB bank- ing group.
"I see it as quite an exciting time for the broader investment community," says Edwards. "People talk about ethical and SRI funds. In my world, it has evolved to talking about responsible investments."
The Responsible Investment Leaders Fund, a unit trust, is managed on an SRI basis, investing in companies which are leaders in considering social and environmental issues in their business.
Companies from the armaments, alcohol, gambling, pornography, tobacco and uranium industries are screened out of the portfolio.
Responsible investments include companies working on future new technologies.
The NZ Anglican Church Pension Board, a KiwiSaver provider, says it is looking into the AMP Capital Investors' responsible unit trust.
"We are looking at something more appropriate," says general manager Gillian Robertson.
The NZ Anglican Church Pension Board, a pension fund for all church clergy and lay church staff, has been ethically investing since the mid-1980s.
Robertson says they have sold companies if they felt they were not being honest with investors.
The church pension fund is rare in its active management. Most NZ fund managers are still relatively passive on the subject of investing in only responsible companies. Many give the response that they are following the lead of the NZ Superannuation Fund.
Spiller says, if they are following the lead of NZ Super they will be signed up members of the Ethical Investors Association, they will have signed the UN principles of responsible investing, and will have published their policy on investing.
Some of NZ's most successful fund managers are yet to be convinced. Fisher Funds director, Warren Couillault says the investor does not intend to launch a specific ethical fund.
"Our investment policy is we only invest in companies that are properly governed, and have best business practice. At Fisher Funds, we don't think we need to ringfence certain parts of our funds. We think all our companies are ethical investments."
Gareth Morgan's KiwiSaver Fund managing director, Andrew Hawith, is sceptical. "I'd be fascinated to see how ethical some of these investments really are. How can you tell?
"I'm sure we will be investing in ethical as a mixture of portfolios but it would be dangerous to have your savings locked up for 30 years and into just an ethical fund," says Hawith.
