Ethical investing is on the rise worldwide with investors increasingly concerned about making a positive impact on society while generating decent returns. Such investments in Asia have been forecast to rise to at least US$1.5 trillion by 2015. The trend has caught on in Singapore, said managing director of Impact Investing Exchange (IIX) Asia Robert Kraybill: ‘More people want to integrate their investments and philanthropic donations.’ Next month see the first Impact Forum in Singapore with the theme ‘Igniting Capital Markets for Social Good. Read More

Financial service providers see rise in number of people who put their money behind their values

By Yunita Ong in Sunday Times (20 May 2012):

Ethical investing is on the rise worldwide with investors increasingly concerned about making a positive impact on society while generating decent returns.

Putting your money where your values lie can take a number of forms. It can mean excluding companies that make or deal in arms or those involved in gambling, alcohol or other ‘sins’. Or, it can be about supporting companies that strive to make a positive social impact such as on the environment.

Those calling themselves impact investors provide funds for social enterprises to help growth in less developed countries.

In 2008, socially responsible investments supported by the world’s major institutional investors were estimated at US$5 trillion (S$6.2 trillion).

Such investments in Asia have been forecast to rise to at least US$1.5 trillion by 2015.

The trend has caught on in Singapore, said managing director of Impact Investing Exchange (IIX) Asia Robert Kraybill: ‘More people want to integrate their investments and philanthropic donations.’

Syariah-compliant funds, which exclude ‘sin’ industries like gambling and alcohol, are among the more well-known ethical funds.

HSBC Insurance has been offering Takaful funds – insurance comprising a pool of funds – and products here since 1995.

Mr Walter de Oude, chief executive of HSBC Insurance Singapore, has seen a ‘steady participation rate’ by investors in its syariah-compliant investment-linked products (ILPs) and Takaful offerings and growing interest even among non-Muslims.

Environmentalists may warm to the HSBC Global Investment Funds Climate Change Fund launched in 2007.

Its fund manager, Mr Angus Parker, said it is based on ‘a portfolio of global companies across all sectors’ which are ‘managing their businesses in the face of climate change to maintain or enhance their competitive advantage’.

Investor John Lim, 51, had the chance to buy potentially lucrative Las Vegas Sands stock, which had been trading at $2 during the financial crisis, but decided to pass.

His Christian faith guides him away from ‘vice’ industries like liquor and cigarettes.

‘I was confident that the stock would rebound but I put my money in other stocks because the company did not agree with my values,’ said Mr Lim.

In a way, ethical investing is just like investing in any other fund – there is potential for the fund to perform poorly.

Since its inception in 1999, Aberdeen’s Ethical World Fund has lost about 8 per cent if dividends had been reinvested, according to Bloomberg. During the same period, the MSCI index rose about 10 per cent.

But Mr Lim shows that you do not have to give up financial returns to invest ethically. He bought shares from Sabana’s syariah-compliant REIT in 2010. It fits into his personal no-vice policy while giving him about 9 per cent in annual returns, he said.

Those wanting a share of the ethical investing pie can get help from banks like UBS, which set up an advisory team here two years ago in response to growing client demand.

Mr David Evans, its head of philanthropy and values-based investing for Asia-Pacific, said: ‘In Singapore, (investors) are now forming their own investors’ circles or working through umbrella groups to find deals and co-investors.’

One example is IIX’s Impact Partners network, created last year to connect members to investment opportunities in social enterprises across Asia-Pacific.

Barclays has MSCI, which provides tools like indices and analytics to investors to develop a set of fixed income indices that incorporate environment, social and governance factors.

‘We expect these new benchmarks to fill a gap in the market and facilitate the growth of environmental, social and governance investment,’ said managing director and head of the MSCI Index Business Baer Pettit.

Source: www.straitstimes.com and www.shujog.org/impactforum2012/