Christian Super’s impact investments are an integral part of its portfolio construction because they deliver risk-adjusted returns via uncorrelated return drivers.
Simba Marekera, senior portfolio analyst at Christian Super, told delegates at the inaugural Impact Investment Summit in Sydney that it does not apply impact discounts in pursuit of this strategy.
“Unless we were convinced we could achieve that [commercial grade] level of returns we would not invest,” Marekera said. “This has made it easier for the investment committee to look at these investments and approve them as any other.”
From a portfolio construction perspective impact investments tend to be uncorrelated to other asset classes. They are in a different region and they have different return drivers. This proved advantageous during the GFC as they did not experience the same loss as other asset classes, with some even growing during the turmoil.
“From that perspective we need them in the portfolio to create a more diversified portfolio,” said Marekera.
To help achieve this strategy, the super fund has piggy backed on a number of global players, especially in equities in emerging markets, leveraging their expertise to help them gain depth of understanding.
Sophie Newby, investment analyst at First State Super, made the point that super funds’ core competencies don’t include charities, so intermediaries were needed to enable them to invest.
In a separate point, she said First State Super was looking at investing not only in social and affordable housing, but also disability housing across New South Wales.
“We are not saying we have cracked it at all but we are saying we can definitely be part of the solution in that area. Housing stock is the second largest item on the NSW balance sheet after roads and maritime,” she said, identifying the area as having potential to generate returns and deliver wider benefits to members and society.
