Crystal Wealth Newsroom
Investing in a socially-aware world
As a society, we’re becoming increasingly aware of the impact we collectively have on the world – and becoming more and more driven to do something about it. Whether it’s taking steps to reduce our carbon footprint, or being more selective about the origins of our consumables or donating time or efforts to charities, many of us are trying to do our bit.
After an in-depth consultation with clients and reflecting on industry trends, Crystal Wealth Partners has recently launched a series of Responsibly Invested Portfolios – a new offering that will run alongside its traditional investment portfolios – that will enable clients to choose the portfolio that invests in those companies and industries that are having a positive impact on the world, and align more closely with their personal values.
“Over the years, we have had requests to invest portfolios in line with people’s individual views and principles. We have accommodated them where we could, but it has always been a little less than perfect and can often compromise the portfolio construction,” says Lisa de Franck, advice and investment manager at Crystal Wealth Partners.
“What’s different now is we’ve got access to a vast array of data, which allows us to dig deeply into the impact that companies are having on society and the environment in addition to just looking at financial metrics.”
Responsible investing, also known as ethical or sustainable investing, is a holistic approach to investing where social, environmental and corporate governance factors are considered alongside the more traditional financial analysis to make investment decisions.
“This approach scrutinises the business practices, not just the results,” says de Franck. “So, for example, we might divest from a company that has controversies surrounding their environmental practices, or has a higher incidence of workplace accidents. We might invest in a Fund that provides capital to develop social housing or one that focuses on renewable technologies or sustainable practices.”
As an investment approach, responsible investing has been around for a few decades now – however, it’s only over the past 10 to 15 years that adaptation has grown around the world.
“In Australia, we’ve seen a phenomenal amount of capital flow towards responsible investment over the past two years particularly,” de Franck says. “Of professionally managed funds in Australia, 44 per cent now take this approach.”
The consumer demand in Australia has been overwhelming. According to the Responsible Investment Association of Australia, the total value of impact investment products available to Australian investors at the end of 2019 had risen 249% to $19.9 billion from $5.7 billion as at 31 December 2017.
And it’s not an approach that’s just a feel-good thing, either. In fact, a study by the Responsible Investment Association of Australia in 2019 showed that responsible investment Australian share funds outperformed mainstream Australian share fund benchmarks for all periods. Over ten years, the average responsible investment fund performed at 9.00%, with the S&P/ASX 300 Total Return at 7.80%.
And, the fact that companies that are doing things in the right way – and looking to make a sustainable impact on the world – are performing well shouldn’t come as any great surprise.
“This responsible investing approach covers so many factors, and ultimately what kind of companies do you want to be investing in? One which considers all of those elements, or do you want a company that’s purely focused on shareholder profits?” asks de Franck.
“Financial returns in one year? Great. But what’s happening to the company years down the track? We are here to generate investment returns for our clients, and with the responsible investing approach, we can align the investments more closely with personal values.”
If you have questions about responsible investments, or would like to learn more about our new responsible investment portfolio, please contact Lisa or any of the team at Crystal Wealth Partners, who’ll be happy to help.