Most investment providers these days talk about responsible or ethical investing, but how committed are they to this?
Are they really going to set some rules and stick to them, or do they make the statements to satisfy themselves that they are doing okay but really are not too concerned.
This week we met with AE / Always-Ethical to discuss how they manage their investments and especially for KiwiSaver.
Always-Ethical is a boutique fund management group based in Auckland and they specialise in providing ethical investment solutions to New Zealand and international investors.
Always-Ethical currently only offer two ethical investment products: AE Investor and AE KiwiSaver Plan.
We have been monitoring their investment returns which are quite impressive and we wanted to check out exactly how ethical they are.
How They Invest
Always-Ethical will only invest in ordinary shares in US listed companies and cash investments in both NZD and USD.
They invest directly and therefore the published fees may seem a bit higher than many investment funds, but because they invest directly there are no other hidden fees with underlying fund managers.
The funds is called a Growth Fund because of the exposure to offshore sharemarkets, but they have a conservative way of investing given the commitment to only invest in companies with low debt and they avoid any companies that use leverage. They also will often hold a large portion of the fund in cash which would mean they would compare to a conservative fund, but they retain the flexibility to invest so they cannot call themselves ‘conservative.’
They will also only every invest in a maximum of 50 individual companies, and they list those all on their website – Always-Ethical Investments
Invest With Strict Ethical Commitment
Unlike most KiwiSaver providers, Always-Ethical publish their ethical commitment and it certainly goes beyond what most fund managers would consider.
As well as excluding the investment in many of the obvious areas (Weapons, Gambling, Alcohol, Tobacco, Adult Entertainment and others) they also exclude all financial institutions (Banks, Money Lenders and Insurance Companies) as they have no control on what customers those businesses might support, and they also will not allow any leverage which is a practice of many fund managers.
Leverage puts your investment at an unethical risk and therefore it is absolutely prohibited.
They also apply financial ratios to any investment and only invest in companies where any interest-bearing debt is less than 30% of the asset value and the company must be making or doing something for the good of humanity to exceed 67% of total assets.
