Did you know that you can choose to invest your KiwiSaver money in a ‘socially responsible’ fund? What does it all really mean? Let us KiwiSaver Advisers explain.
Responsible investment is a process that takes account of environmental, social, and governance issues when selecting where to invest your money. Underneath responsible investing sits ‘ethical investing’, which accommodates specific investor values. Socially responsible funds are an example of ethical investing as they explicitly exclude companies which are involved in controversial industries (think guns, booze and oil).
It’s a relatively new concept, but it’s increasing in popularity both here and internationally. Regulatory authorities, such as the Responsible Investment Association Australasia (RIAA) have surfaced to allow the industry to be defined for consumers and held to a high standard.
While the mainstream socially responsible funds will exclude investments where the underlying activities are principally involved in industries such as fossil fuels, gambling, alcohol, tobacco, and armaments, each fund will vary so it’s important you check in with your KiwiSaver Adviser.
Does it affect returns?
Sustainable investors work to achieve strong financial performance, but with the firm idea that these investments should be used to contribute to the ongoing development in social, environmental and governance practices. As with any investment there is market fluctuation, but we would usually expect to see a return of similar results to its standard counterpart. As these funds are relatively new there may not be any 5 year return data yet – either way always talk to your adviser for advice. And of course, with any investment it’s important not to base decisions on past returns, but rather future potential.
As we as consumers start to demand more of these services, we can expect to see development of a wider scope of funds available, and with greater depth to what is deemed ‘socially responsible’. Expect to see spin-offs like environmentally responsible funds, for instance. It stands to be a very powerful way for the average person to be able to positively influence how our global society operates.
Want to look at making your KiwiSaver money socially responsible?
As always, talking to your Adviser will enable you to weigh up the pros and cons of any investment decision.
Are you a Booster KiwiSaver Scheme member?
In that case you have the option of choosing from their three specialist socially responsible funds: Conservative Fund, Balanced Fund or High Growth Fund.
Talk to us today about your options – you can email our KiwiSaver advisers or give us a call on 06 870 7050.