Pension consulting firm Hewitt Associates has launched a new managed investment service it says will provide its clients easier access to long-term sustainable investment opportunities.
It will first focus on three specific themes: water, agriculture and renewable energy.
The consultant will blend together specialist niche asset managers to build what will look like a single portfolio to clients, with Hewitt providing consolidated reporting of the various themes. Tim Currell, Hewitt’s head of sustainable investment and corporate governance, told Responsible-Investor.com: “We are aiming to make it as easy as possible for pension funds in the UK and Europe to access sustainability themed investing.” He said the initiative had grown out of dialogue with clients over several years.
If a pension fund wants a €50m allocation to sustainabilty, Hewitt will blend a portfolio for the client, bolting the managers together so the client isnot exposed to just one theme, such as water. Hewitt will be “in charge” in terms of balancing between themes and managers, although the fund will appoint the managers in the usual way.
Hewitt has identified four fund managers so far, which Currell declined to name, although he said they are well-known in the sustainability sector. All the managers have to meet Hewitt’s normal manager research criteria. Currell said he was confident about the managers’ track records, saying they had returns in excess of 5% per annum ahead of global equity indices. Future themes, he said, could include forestry and biotech.
The new approach will be benchmarked against the MSCI World Index because, Currell said, clients will be allocating to the new themes from their equities portfolios and will want to match performance against global equities. The themes will contain listed equities only to ensure “liquidity and familiarity”.
The service will be available to UK and European pension funds.