In conversation with advisers: SRI mean compromising performance?
Partner Insight: Dennis Hall, director and CEO of Yellowtail Financial Planning, Julia Dreblow, founder of SRI Financial Services and Frank Potaczek, head of UK proposition at Architas met in London to discuss how they broach the topic of sustainability and responsible investing to clients.
In the fourth video of the series, they talk to Julian Marr, editor of Professional Adviser on whether investing in SRI means compromising performance.
Potaczek: "There is a view that certain fund managers have made money from investing in tobacco, fossil fuels etc and done very well from it. Therefore if you exclude those, you won't make much money. But there is academic evidence that if you adopt and environmental, social or governance screen that you are whittling out poorly performing fund managers. It is not only monitoring the performance on the upside but avoiding the mistakes, for instance the diesel scandals and oil spills. So good governance helps you stay out of trouble."
Dreblow: "There are good fund managers and bad fund managers. What is a bigger risk, however, is for funds to be ignoring these issues and failing to understand what is happening in the wider environment - in relation to the sustainability agenda, climate change and human rights. If they are not understanding the risks of the companies, they are investing in those areas, then they are poorly serving their clients. The more extreme end of that, is the funds focusing on this area, which have excellent track records and are performing really well, with the caveat that there will be ups and downs from markets and different fund managers."
Hall: "I like to give clients what they want. When we have been doing some research on SRI funds for our clients we have been surprised initially to find that these funds have performed better, in some of the periods, not equal. I have no fear anymore of recommending SRI funds."
