Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Perennial gets $100 million from Mercer for sustainable SMIDs
Perennial says that the mandate “demonstrates Mercer’s confidence in Perennial’s Better Future approach to sustainable investment”. The Perennial Better Future strategy has seen strong growth in FUM over the last 12 months and currently sits at around $220 million off the back of rising demand from the market for “authentic ESG products”.
Run by portfolio manager Damian Cottier and co-head of ESG and equities analyst Emilie O’Neill, the strategy focuses mainly on healthcare, education, renewable energy and low carbon technology, and has a significant chunk of the portfolio invested in companies that are focused on “addressing global sustainability challenges.”
“It is pleasing to be recognised for our differentiated and authentic approach to ESG and sustainable investing,” Cottier said. “We are leveraging Perennial’s large and experienced investment team to find companies that are shaping a better future while pursuing strong, consistent returns for our investors. In this way, we are empowering investors and companies that are seeking to shape a better future.”
Cottier says that a key goal of the strategy is to demonstrate that there is no performance trade-off from “investing in companies shaping a better future”. The strategy has delivered +7.0 per cent per annum net of fees since its inception four years ago, outperforming the S&P/ASX Small Ordinaries Accumulation Index by +5.1 per cent per annum.
Globally, Mercer advises on more than US$17 trillion in assets and manages about US$388 itself. Its sustainable investment team has been advising institutional investors on sustainable investment approaches for more than a decade.
“Mercer’s long standing track record within the industry further highlights the true nature of an endorsement of this nature into the Perennial Better Future Strategy, and also the strength and the impact sustainable investing has on a global scale,” Cottier said.
