Harbour releases inaugural impact report

Harbour Asset Management has released its inaugural impact report and revealing that investors in its flagship Sustainable Impact Fund suffered a 0.31% loss over the past three months.

Tuesday, November 1st 2022, 8:36AM

by Jenni McManus

Launched at the end of November 2021 as the market began to fall, the fund is now worth $4.5 million. Not an ideal time to bring a new fund to market, says portfolio manager Chris Di Leva, but he’s comfortable with its performance to date.

“We didn’t expect this to be a big fund from day one, but it’s been pleasing to see how it’s navigated this market volatility and delivered returns that are very much comparable with mainstream 60/40 funds,” he says.

The 60/40 refers to the fund’s allocation of growth and defensive assets, spread between listed and private equity (global and domestic), bonds and a smidgeon of venture capital investment.

But unlike most impact funds, which are open only to wholesale investors, Harbour’s is accessible to the retail market. The asset mix means it’s not regarded as particularly high risk and the exposure to venture capital will be limited to somewhere between 5% and 10%.

The fund has two objectives: delivering impact and financial returns.

As it stands today, $10,000 invested at the fund’s inception on 30 November 2021 would be worth only $8,638 after fees (1.20%) but before tax. The aim is for returns to exceed the OCR +4% over rolling five-year periods.

Harbour seeded the fund from its own balance sheet. Other investors include “ethical” financial advisers who’re rolling it out across their client base, and high-net-worth individuals who’re “later-on in life and are really mindful of the impact their investments are making on the world”, Di Leva says.

He also expects the fund to be popular with charities as it builds a track record. “I think it’s a perfect fund for charities [as they] need to ensure their investments don’t detract from the good they’re doing in the community.”

The Sustainable Impact Report has been designed to update investors, in detail, on the 132 issuers in 23 countries which make up the fund to date. Importantly, in Harbour’s view, the report offers investors transparency around how investments are selected and impact is measured.

Globally, measurement has for years been a sticking point for impact funds but critical to maintaining their integrity.

Harbour has invested in tools to give it independent data to help with its calculations and carbon foot-printing. “It gives us an independent opinion on some of the judgments we make on companies,” Di Leva says.

This means the report is, in part, quite technical “because there is a burden on the investment provider of funds like these to [prove they] do what you say they do. The only real way to do that is through detail.”

Detail is also important for investors to see that Harbour is applying the impact framework across the entire portfolio – bonds, equities and in both public and private markets.

And in a sector where there is no agreed definition of what impact investing actually means, Di Leva says it’s important that investors are clear about where Harbour stands on the matter.

“Hopefully, with that level of transparency, people can decide if this fund meets their definition of impact and what they’re trying to achieve on both the financial and social and environmental front.”

Harbour uses the same impact definition as the Global Impact Investment Network (GIIN): “Investments made with the intention to generate a positive, measurable social and/or environmental impact alongside a financial return.”

It is not the same as excluding potential investments by putting an ESG lens across them. That, Harbour says, is not enough to meet current social and environmental challenges and a more positive and proactive approach is needed. For that reason, each of the investments in its Sustainable Impact Fund can be linked to one of the UN’s Sustainable Development Goals (SDGs).

“The SDGs outline some of the greatest challenges facing humanity and we believe the companies that aim to addresses these issues will not just deliver environmental and social value but also generate significant financial value,” the report says.

Tags: Harbour Asset Management