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(August-2002) Ethical account to target SMSFs
The Ethical Investment Company of Australia(EICA) has launched the first ethical individually managed account enabling clients to invest in a customised portfolio of Australian and international equities to reflect their own needs and values. A wholesale version will be launched later this year.
Known as EICA’s Discretionary Portfolio Service (DPS), the product is targeted at self-managed superannuation funds. A minimum investment of $200,000 is required, which is generally much lower than what investors need to access a personalised service without ethical elements from private banks.
The wholesale investment fund will be aimed at not-for-profit groups and super funds and will be by information memorandum. It will have a minimum entry level of $500,000.
According to Steven Taylor, a senior financial planner at EICA, the DPS offers do-it-yourself investors an opportunity to “put the energy of their money in the direction of their values”.
Normally the preserve of very high-net-worth or institutional investors, individually managed account-like services are growing in popularity in Australia as an alternative to managed funds. But unlike managed funds, investors in EICA’s DPS will retain ownership of the securities bought on their behalf and will have a personalised portfolio, tailored to their own ethical profile.
Investors will be offered a portfolio of Australian stocks that is screened to exclude companies involved in weapons manufacturing, uranium mining and processing, old growth forestry, tobacco manufacture and gaming. The companies are also evaluated on their human rights and environmental record.
This research is combined with qualitative and quantitative investment analysis to deliver a universe of 340 stocks. From this universe, EICA will recommend a portfolio of 50 to 70 stocks that can include up to 20 per cent of international stocks. Clients will have the discretion to make changes according to their own views.
The Canberra-based Centre for Australian Ethical Research will provide the ethical analysis of Australian companies, while research on international equities comes from EICA’s sister company The Ethical Co-operative, which is based in Edinburgh, UK.
There are no entry or exit fees, but a management fee of two per cent and a performance fee of 10 per cent of the returns above the portfolio benchmark are charged.
The benchmark will be determined in agreement with the client when the portfolio characteristics have been finalised.
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