The recently launched Good Super is dedicated to pursuing investments that overcome the “grand challenges” in Australian society, writes RACHEL ALEMBAKIS.
Aron Ping D’Souza, executive chairman of Good Super, believes superannuation provides the combination of time, money, and intent needed to answer “grand challenges” facing Australian society. If it invests wisely he believes it can impact on affordable housing, extreme poverty, land use, food security, gender equality, indigenous health, efficient mass transit, social justice and human rights, corruption energy, clean drinking water and youth unemployment, among other issues.
D’Souza says the superannuation system has money, a long time frame needed to impact on these areas, but could do far more good for society in the way it invests. This was the driver behind him and Phil Kingston, the executive vice-chairman of Good Super setting up the fund.
“We saw that the superannuation system could be a powerful force for change. It could be the driver of Australia’s social, environmental and economic success in the 21st century, if there was just a little more intention, a little more long term thinking, a little more holistic approach. That’s why we started Good Super, and it’s a message that has resonated very well with the market.”
Good Super is a retail public offer fund, having been approved by Equity Trustees in October. The fund has more than 5,000 members signed up, and is on track to raise $20 million in assets under management per month, but the team has set its sights on capturing up to 1 per cent of the superannuation market – $17 billion.
Assets are wholly outsourced with Perpetual, AMP Capital Investors, Triodos Bank, ANZ and Social Ventures Australia as its external managers, and has fees that are in line with retail fund averages. The lineup selected was based on both performance and integration of environmental, social and governance (ESG) metrics into their investment practices.
“I interviewed virtually every [Responsible Investment Association Australasia] RIAA-certified fund manager in Australia,” D’Souza says. “It became obvious after a short series of conversations that for some of these organisations, the integration of ESG was secondary, just something nice to put on the annual report. For others, the integration of ESG was part of their investment strategy and their ESG staff sat alongside their investment staff, or was one and the same. It became very obvious who the best fund managers in the business are. Is there adequate coverage for fund managers, an adequate pool? We have $1.8 trillion in the superannuation market, at least a trillion invested in equities there, and maybe 2 per cent are in ESG strategies. It’s nothing.”
The current shape of the superannuation industry and the emphasis on low-fee products will constrain investment decisions generally, and have led Good Super to not pursue a MySuper product at this time.
“The challenge moving forward particularly with the MySuper reform, Stronger Super, and the low fee environment in general is that the low fee environment distorts the asset allocation to where money can be run cheaply in huge quantities,” D’Souza said. “Index-linked equities, real estate, infrastructure are things that appeal in this environment. What is really lost out is venture capital, social impact and private equity and other innovative financial instruments that could be drivers of change and growing the balances of our members. So that’s concerning to me on policy ground, and it’s one of the reason why Good Super is not yet a MySuper fund, until we can have an innovative asset allocation as well as a low-fee product. The discourse we have about lower fees is misappropriated because it should be about returns less fees.”