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Balanced socially responsible

The Balanced socially responsible option in detail - for pension members

Return objective

  • To maximise long-term investment returns.
  • To outperform an average annual return of CPI plus 3.5% p.a. net of tax, investment and administration fees over rolling 10-year periods

Risk profile

Short-term fluctuations will occur, but the highest investment returns are expected over longer periods. This option is likely to produce a negative return in 4 to 6 years in every 20 years.

Risk level: 

High

Investor profile

Will suit investors looking for moderate to high returns over the medium to long-term, but who are prepared to accept fluctuations in investment performance over shorter periods

Investment strategy

The Balanced Socially responsible option currently invests into the AMP Capital Ethical Leaders Balanced Fund (ELB Fund). This is a multi-manager fund operated by AMP Capital that considers environmental, social and governance (ESG) factors when making investment decisions. Currently the ELB Fund applies ESG factors in the selection of managers who invest in Australian and international shares, direct property, corporate and government bonds, and alternative investments. The ELB Fund does not currently consider these factors in relation to investments into cash. AMP Capital selects the managers of the ELB Fund based on both investment and ESG criteria. In addition to assessing a manager’s investment capability, consideration is also given to a manager’s ability to substantially meet the responsible investment criteria outlined in the ELB Fund’s Ethical Leaders Charter of Operation (‘Charter’). At a minimum, a manager must also be able to meet the negative screening criteria listed in the Charter. Managers will also be well-regarded if they can pro-actively apply sustainable and responsible investment criteria to their security selection approach, above and beyond these exclusions, on behalf of the ELB Fund.

The ELB Fund is governed by an ethical charter which prohibits investments in companies operating within sectors recognised to have a high negative social impact. This means that the ELB Fund will avoid exposure (either directly or indirectly through underlying managers and funds) to companies with a material exposure to the production or manufacture of:
• tobacco;
• nuclear power (including uranium);
• armaments;
• gambling;
• alcohol; and
• pornography. 

A company deriving more than 10% of its total revenue from these industries constitutes material exposure. In addition, with the combustion of fossil-fuels being the main source of global greenhouse gas emissions, the ELB Fund’s range seeks to limit exposure to companies which have a material exposure to the most carbon intensive fossil fuels by excluding any company that has more than a 10% exposure (as measured by percentage of market capitalisation, or other appropriate financial metric) to one, or a combination of, the following:
• mining thermal coal;
• exploration and development of oil sands;
|• brown-coal (or lignite) coal-fired power generation;
• transportation of oil from oil sands; and
• conversion of coal to liquid fuels/feedstock.

Exclusions may be updated, from time to time, following review and approval by the ELB Fund’s Ethics Committee. Investors will be notified of any changes to the Charter, including changes to the exclusions.


Performance

The Balanced socially responsible option investment strategy was substantially changed on 1 July 2014, and past performance is not reflective of this investment strategy.

Balanced socially responsible pension performance chart

Returns shown are net of investment fees and tax, gross of administration fees. Past performance is not an indicator of future performance.