Scheme advisers fail to embrace SRI issues
Pension scheme advisers have been slow to push socially responsible
investment (SRI) to their clients, said Chris Edge, chief executive of Pavilion
Asset Management. He said that few consultants were really embracing the
issue.
"They are talking to us about it, but consultants are not getting to
their clients," said Edge.
Most fund managers which have acknowledged SRI
are offering an engagement approach product. Edge said: 'There is a role for
engagement, but I think it is a bit wishy-washy."
He said the risk issues
that are used as an argument against SRI funds had been exaggerated because few
large stocks were excluded. Pavilion launched its Eco Friendly fund earlier
this year. It is based on a preference approach, which rewards the companies
with the most positive approach to SRI issues. No industry sectors are excluded
from the stock selection and the investable universe may be reduced by around
20% of the market by market capitalisation.
Pavilion's UK equity team is
the same group which manages the Eco Friendly Fund and Edge questioned how fund
managers with separate SRI teams could actually work. With the greatest
enthusiasm towards dedicated SRI mandates being shown within the local
authority market, Pavilion is particularly active at tendering within this
sector.
Pavilion recently won its first major external mandate, picking up
a £150m brief from POIS Assurance which was a mixture of pension fund and
life assurance money. The pension fund put around £10m into UK equities.
As a new player - becoming a separate entity within the Family Assurance Group
in September 1997 with £2.2bn under management, Edge said he expected
Pavilion to establish itself in the institutional investment market.
He
said Pavilion was now recognised by consultants as a UK equity and SRI
specialist and the asset manager is now aiming to be on all their buy
lists.
Pensions Week
3 July, 2000
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