There are fewer super funds, and associations that represent them, than ever before. But multiple layers of industry representation working at cross-purposes means that true unity has remained elusive, according to the Financial Services Council.
The world’s largest sovereign wealth fund just made its largest return ever. But the probability of extreme market events has “arguably risen”, and it’s carrying out stress tests for a more uncertain future.
Baird bounces back at impact investing talkfest
(pictured: Mike Baird)
by Greg Bright
He may have been on the back foot over shark deterrents on NSW beaches and the cruel world of greyhound racing, but last week the NSW premier, Mike Baird, was able to stand proud before the Australian investment community on a much more important subject.
He told the annual Impact Investment Summit Asia Pacific in Sydney: “Of all the things we do in government, this is at the cutting edge… We are able to change the future. The real power in this is not just about putting more money into it, but more importantly, it’s about a shift in the government and non-government sectors to work furiously on outcomes for people.”
Baird said: “Governments have a great responsibility if the economy and the budget is moving ahead, as we’re doing. You can’t leave behind those who are most vulnerable… NSW was the second government in the world [after the UK] with its first social impact bond. Which helps families to stay together… In its first three years this bond has helped 130 children to be restored to their parents and another 47 were prevented from being removed… The bond has also delivered 12.2 per cent to investors.”
The NSW Government has subsequently issued two more social bonds, the latest of which is to help ease the cost of recidivism – when former convicted criminals re-offend. Baird said that the re-offending rate for criminals was 47 per cent and people in jail cost the taxpayers between $120,000 and $150,000 a year. “If we can get that down to 30 per cent that’s a great benefit, both financial and socially,” Baird said.
The NSW Government was committed to issuing two social impact bonds per year, he said. There were three bonds which were now at the RFP stage: an early childhood education program; a children adoption program aimed to expand people’s options, and a youth unemployment program.
The conference also marked the release of Australia’s first comprehensive ‘data-set’ of the nascent impact investing sector, showing a total investment product value of $1.2 billion for last year.
The report, ‘Benchmarking Impact: Australian Impact Investment Activity and Performance Report 2016’ presents the findings from an analysis of impact investment activity and performance data of Australian impact investments active as at June 30, 2015.
The report, produced by Impact Investing Australia, says that there has been a steady increase in the number of impact investments over recent years, with the bulk of the 2015 investment transactions comprising debt financing to social enterprises. Green bonds issued by the major banks dominated an in increase in dollar value of investments.
‘Impact’ investing is the term generally given to investments which set out to make a positive social difference alongside a reasonable return to their investors. Such investments are usually complementary to the ESG strategy for a big super fund, family office or other fiduciary investor.
For big investors one of the challenges they pose is accessing investments of sufficient scale to justify their positions in a portfolio. Most impact investment opportunities in Australia are relatively small. They are also complex and involve various stakeholders including governments and charitable bodies.
The returns quoted for the 15 investments for which performance data was available – totaling $1.2 billion in value – vary significantly. They range from 5.4 per cent to 17 per cent for debt, 3.25 per cent to 12 per cent fro other fixed income and zero to 12.6 per cent for ‘real assets’.
