PA ANALYSIS: £715m in 'ok' funds is not good enough

Added 1st April 2016

Last year saw record inflows into SRI funds yet the choice available is ok at best according to the buyers and potential buyers of said funds.

On the other side of the fence during the past decade we have also seen the rise in the number of intermediary firms specialising in SRI, with a shout out to Holden and Partner and EQ Investors in particular - if you have not heard of the latter then you may know their CEO, John Spiers who set up Bestinvest in the late 1980s.

As well as a screen that identifies various levels of corporate engagement and positive selection, his fund selectors give a higher weight to those managers investing in companies actively solving the social and environmental problems we face.

Ultimately, however, it is still about performance as Daniel Bland, an investment manager at EQ Investors, explains: “We always apply our in-house quantitative screen to identify managers consistently adding value. If we are not convinced that that the extra costs of active management can be compensated by superior performance, a passive strategy is sought. After all, the focus is always to provide a healthy return to investors, whether they decide to opt for socially responsible investment or not. In our experience the innovative sectors offering positive environmental and social impact provide excellent investment opportunities.”

The future looks very rosy indeed for SRI investors as they have a greater choice of funds available - passive and active as well as open and closed-ended - with an increasing number of advisers to buy them through.

Here’s that magic word again…but…at a recent SRI event that Portfolio Adviser hosted, more than 75% of wealth managers present said the fund choice available was either ‘ok, but improvements are needed’ or ‘there are not enough quality funds at all’.

While society, legislators, wealthy philanthropists, companies, wealth managers and their clients are all looking for more SRI-friendly investment approach, the fund groups need to work on their product offering. Or work on the communication of that product offering because if they have not spotted it yet, last year their ‘ok’ funds still attracted £715m in AUM - a record figure.

To answer the question about investors having their cake and eating it, the answer is 'Yes, they can'. But it tastes stale right now...

Inside the Portfolio Adviser - March 2016 Supplement Issue

Portfolio Adviser - March 2016 Supplement

Portfolio Adviser once again celebrated excellence in fund management at its annual Fund Awards in an invitation-only ceremony, held over a lunch at Banking Hall in London. It was a chance for Portfolio Adviser’s editorial team to recognise those funds and their managers who, in the opinion of an independent judging panel, are best placed to provide the best risk-adjusted returns looking ahead. The Awards are all about future prospects not past performance so here is our take on the winning funds and their managers including expert comment from our judges. 

Click here to view the issue


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About Author

Gary Corcoran


Portfolio Adviser & International Adviser

Gary Corcoran is the editorial director for Portfolio Adviser, International Adviser and Fund Selector Asia. He is also programme director and chairman for events hosted across the UK, South Africa, Middle East and Asia. Gary joined Last Word Media in August 2006 as the launch editor of Portfolio Adviser, having previously worked at Bacon & Woodrow, Legal & General, FT Business and MSM International.



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