Ethical KiwiSaver leaves others in its wake

Ethical KiwiSaver provider Pathfinder has marked its third anniversary by delivering three-year financial returns that are number one across all funds; Growth, Balanced and Conservative (Morningstar data to 31 July 2022*).

Tuesday, September 6th 2022, 9:55AM

The award-winning, boutique investment firm committed to building a better world has delivered returns of 11.39% per annum over the three-year period in its Growth fund, streaks ahead of the average of 5.01%. Its Balanced and Conservative funds returned two and two and a half times the New Zealand average, respectively.*

This stellar financial performance is a welcome piece of good news for Pathfinder investors considering the state of the financial markets recently.

And it’s a huge achievement for the Pathfinder team, who are justifiably proud of the results. “This has been a really challenging period for investing,” says Pathfinder co-founder & CIO Paul Brownsey. “Our industry has battled the far-reaching effects of the pandemic, historically low interest rates, the worst six- month period for bonds in history, high inflation and technical recessions in some major economies, just for starters. To eclipse 11% per annum for three years for our Growth fund, three percent ahead of our nearest competitor, is phenomenal in these conditions.”

There are a few key things that set Pathfinder – which launched its KiwiSaver product in 2019 – apart from others, Brownsey continues. “One is that we’re truly active managers, allowing us to modify the risks we take on behalf of our investors. We don’t feel constrained to match a benchmark like a passive manager. For instance we have, for a long time, not invested in long-dated bonds. This approach helped us avoid a big sell-off in those securities this year.

“Another benefit is that we take a long-term view, buying companies that perform over the long run, meaning we don’t get caught out with fads,” says Brownsey. “Most importantly, Pathfinder embraces a highly ethical approach to investment. We not only avoid companies and sectors harming society and the environment, but also invest with the intention of generating as much positive benefit as possible. Examples include investments at the forefront of positive societal change, such as renewable energy, microfinance and a biodegradable replacement for plastics.”

It's a strategy that has met with both criticism and skepticism, says co-founder & CEO John Berry. “As anyone who’s followed this path knows, it can be challenging convincing people that ethical investments are capable of generating great returns. But we’ve proven you can. In fact, we’ve generated number one returns.”

Berry says Pathfinder is experiencing growing demand from those looking to live more consciously – which includes how they invest. And Pathfinder has a track record of making better choices for the environment and for communities. “We’ve been investing ethically since before it was cool,” Berry continues. “We have strong roots in this space, having launched our first ethical fund – the Global Water Fund – back in 2010. A decade ago we were told ethical investing was for tree-hugging greenies. A fund focusing on investing with the world’s water crisis in mind was seen as fringe.”

Walking the talk, Pathfinder’s KiwiSaver operates on a social enterprise model with the firm donating 20% of its KiwiSaver management fees annually to Kiwi charities. This has provided $396,950 worth of additional funding to charities over the last three years, rising from $15,000 in year one up to $280,000 in 2022.

Business is much more than short term profits, says Berry. “Businesses should embed ‘good’ into their DNA to help solve environmental and social issues. They should think long term and support wellbeing and prosperity in society.

“Pathfinder plans to keep proving that ethical investments, with strong financial returns, can help build a better future.”

*Based on Morningstar data https://bit.ly/3w8XnSz comparison for each KiwiSaver fund reported in the same Morningstar category, since inception (July 2019) till July 31st 2022. Find more about return data (annualised before tax and after fees) and benchmark for each fund on our website www.pathfinder.kiwi. Future performance is not guaranteed. Check out the risks of investing from our Product Disclosure Statement (PDS) available at www.pathfinder.kiwi. Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver Plan.

Tags: Pathfinder