The next big thing

One of the new big themes for fund managers will be impact investing, and Harbour Asset Management has jumped onto it.

Friday, December 3rd 2021, 7:30AM

The Wellington-based firm has launched one of the first retail impact investing funds in New Zealand.

The Harbour Sustainable Impact Fund is designed to provide investors with exposure to a diversified range of global and domestic investments which make a positive environmental or social impact.

Habour managing director Andrew Bascand says the idea of an impact fund came about when talking to its international partner T.Rowe Price.

“We asked them what’s the next big thing,” he says. The answer was impact investing.

Bascand says even though developing and launching a fund like this is a big task it was “the fastest I’ve seen a project go from white board to market.”

“It’s generated a lot of energy.”

During the research phase financial advisers were asking for such a fund, Bascand says.

He expects there will be strong support with advisers indicating 5-10% of their clients would be interested in impact investing. It is a balanced fund and is moderate risk, having a risk indicator of four.

The fund is designed to not be “incredibly high risk,” Bascand says.

It has a 60:40 split across growth and income assets.

Harbour co-portfolio manager Chris Di Leva says responsible investing has entered the mainstream over the past five years, and now impact is the new frontier.

“Increasingly Kiwis are wanting to invest to make a positive difference to the world, rather than simply avoiding negative impacts," he says.

“Investors have told us they want to put their capital towards innovative companies that are looking to solve big problems, especially when it comes to clean energy and agriculture."

How the fund is invested:

- Australasian equities will be actively managed by the Harbour team, investing in companies which it expects will generate a strong return and a positive impact.

- Bonds and private credit will also be managed by Harbour, including green bonds, sustainability-linked bonds, and bonds of companies we judge to be impact leaders.

- For global exposure, the fund will engage the expertise of industry leaders such as global sustainable funds pioneer Mirova and Harbour’s long-term global partner T. Rowe Price.

Bascand says the fund will have about 120 global listed companies and there are around 10 companies in Australia and New Zealand. The fund will also invest in venture capital through partnering with Icehouse Ventures.

Icehouse has already invested in a number of successful early-stage companies that are making a positive impact on society and have been hugely profitable for investors, Di Leva says.

“This fits with our philosophy of providing access to experts which complement our experienced local team.”

The fund will be overseen by an expert impact committee of three people plus senior Harbour staff.

Bascand says there will be a lot of learnings in how to measure impact. He says the fund will be managed to “current best practice,” and Harbour is prepared to learn as the fund grows.

The fund is using the UN Sustainable Development Goals as a key metric for the fund because of their widespread global recognition, and the detail they provide in terms of key indicators for each goal, Di Leva says.

"We’ve invested in a range of tools to measure impact for our investors around carbon footprint calculation, exposure to renewable energy, and alignment of each company in the portfolio to UN Sustainable Development Goals”.

Being carbon neutral is another important feature of the fund.

While the fund has been designed to have a lower carbon footprint than the market benchmark, any carbon contained in the fund will also then be offset by Harbour, through investment in projects which actively prevent carbon release and contribute to multiple UN Sustainable Development Goals.

Tags: Andrew Bascand Harbour Asset Management Impact investing