UK-based ethical investment specialist Lee Coates is launching a niche super fund in Australia dedicated to investing only in products that do not contribute to human or animal rights abuses or environmental degradation.
Cruelty Free Super officially launched on October 10, 2010, and Coates said the fund had attracted expressions of interest even before the launch date and he hoped to build it to more than $100 million in funds under management.
The fund is being launched by Melbourne-based Ethical Money, set up by Coates in 2009 to deliver socially responsible, ethical and sustainable investment options via multiple channels. Credit Suisse will manage the fund’s investments.
While there were added costs involved in the extra research to determine whether companies were up to the ethical standards the fund required, those costs were not passed on to clients, Coates said.
The research is a two-stage process, with Credit Suisse telling the UK-based ethical research company which stocks it would like to invest in in an unrestricted world, and the research house then screening that buy list.
The ethical research process actually provides a better picture of companies and may be part of the reason a lot of ethical funds held up during the global financial crisis when logic dictated that they should have been the first ones to go under, Coates said.
The fund will start at a 2 per cent fee and drop back to 1.6 per cent once funds under management passes $100 million, he said.
Despite recent moves towards industry consolidation within Australia, Coates said there was always room for high quality managers or those who were offering something different. Instead, consolidation would come from the hundreds of balanced index funds that were virtually identical to each other, he said.
The fund offered a choice for those with certain beliefs, such as Christians, Muslims and vegans, who might be in a default industry fund that invested in shares that did not match their belief systems, he said.
“No other super fund exists to truly cater for people who want to avoid investing in companies whose activities exploit animals. Now they have a choice, and they can put their money where their principles are,” Coates said.
“People are exploited by companies, as is the environment, and Cruelty Free Super will make sure that no investments are made in any company whose activities could be considered cruel or exploitative in these three main areas — animals, people and planet,” he said.
“This fund will not invest in companies which are involved in animal testing, intensive farming, polluting, armaments, deforestation, climate change, live exports, tobacco, human rights abuse, gambling or genetic modification.”
The UK-based Aegon Ethical Fund and Henderson Global Care Growth Fund, for which Coates established the cruelty free criteria, have both significantly outperformed their comparable indices, Coates said.
Cruelty Free Super will invest in listed shares and interest bearing securities, other investment funds, cash and property, all of which must pass through the cruelty free filter.