Ethical investment returns the goods

Pathfinder, a boutique fund manager with a focus on sustainable and impact investment, entered the rankings in 2019 when it was founded by John Berry and Paul Brownsey. In Morningstar’s data for the September quarter, Pathfinder’s three year returns came in at Conservative 2.8% v -1.9% average, Balanced 5.2% v 1.4% average, and Growth 7.9% v 2.3% average.

CEO John Berry says there has been a big increase in adviser interest this year in Pathfinder’s KiwiSaver. Part of that increased interest is driven by their market leading returns, but there are also other factors- a change in adviser attitudes towards RI, a greater number of ethical investment products on offer, and growing client awareness. A generational shift in investor behaviour also plays a part, says Berry, as wealth transitions down driving more demand. He notes however there are many older people who think about what they’re leaving for the next generation when choosing investments.

“We’re finding that advisers want to incorporate RI within their business these days and front footing rather than waiting for clients to ask them about it. The world is changing fast and climate change is prevalent. Everyone from superfunds to small boutiques are thinking about how their investments have an impact. And of course it’s also a reflection of performance.”

Chief investment officer Brownsey says apart from the feel good factor, RI fund managers still bear the burden of proof. “The vast majority of people still want to see evidence that it’s working and they’re starting to realise there’s no cost to being an ethical investor. You could argue there has been a benefit over the past three years. In the end it comes down to three things: am I avoiding things I don't want, investing in things I want, and getting good returns?”