Australian super funds which have incorporated responsible investment have seen better results than their peers since responsible investment is no longer at the perimeter of the investment philosophy, the Responsible Investment Association of Australasia (RIAA) has found.
The study, which looked at 57 largest superannuation funds and accounted for $1.75 trillion in assets under management (AUM), found that responsibly invested super funds have managed to outperform their peers over one, three and five-year time frames.
At the same time, RIAA compared the MySuper performance of those super funds which employed responsible investment strategies with the MySuper options of those super funds that are not and discovered that the MySuper option of responsible investment super funds outperform the MySuper option of non-RI super funds over five, three and one-year period.
“This year’s report shows that Australia’s largest superannuation funds – including industry, retail, corporate and public sector funds – are ramping up their engagement in responsible investing to drive superior financial performance, reduce risk, and deliver better outcomes for their members and beneficiaries,” Simon O’Connor, RIAA’s chief executive, said.
The study revealed that 81% of Australia’s largest super funds remained committed to responsible investment (up from 70% in 2016), and 72% reported annually on responsible investment activity (up from 44% in 2016), highlighting how responsible investing is increasingly being embedded within Australian investment markets.
The report also identified 13 Australian super funds identified as leaders for articulating and demonstrating a comprehensive approach to responsible investment – Australian Ethical, AustralianSuper, CareSuper, Cbus, Christian Super, First State Super, Future Fund, Future Super, HESTA, Local Government Super, Unisuper, VicSuper and Vision Super – along with NZ Super Fund.
Further key findings included:
Australia’s second-largest super fund has confirmed it is expanding its presence in the UK following significant investment in the region.
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
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