Balanced Socially Responsible

Pension investment option

Return objective

  • 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

  • Offers greater emphasis on shares and property to achieve higher returns, but includes some lower-risk assets to moderate short-term risks. Investments are made with a focus on managing sustainability and environmental, social, and governance (ESG) risks via exposure to companies and issuers that demonstrate leading environmental, social and corporate governance and ethical practices while avoiding exposure to companies and issuers with activities that are considered to negatively impact the environment or society.
  • Further information about what ESG factors and exclusionary screens are applied when making investment decisions can be found below in the ‘Investment Strategy’ section.
  • This option is likely to produce a negative return in 4 to 6 years in every 20 years.

Risk level

  • High

Investor profile

The Balanced Socially responsible option currently invests in the Pendal Sustainable Balanced Fund (SB Fund). The SB Fund is an actively-managed diversified portfolio that invests in Australian and international shares, Australian and international property securities, Australian and international fixed interest, cash and alternative investments. 

Sustainable and ethical investment practices are incorporated into the Australian and international shares, Australian and international fixed interest and part of the Alternative investments components of the SB Fund. (Refer to the ‘Investment strategy’ section below for more information about how sustainable and ethical investment practices are incorporated into investment decisions.) All other investments by the SB Fund are not assessed for sustainable and ethical investment practices. The SB Fund has a higher weighting towards growth assets than defensive assets.

Investing in the SB Fund offers investors a range of benefits:

  • access to a professionally managed diversified portfolio with the potential for long-term capital growth and income;
  • exposure to companies and issuers that demonstrate leading environmental, social and corporate governance and ethical practices while avoiding exposure to companies and issuers with activities that Pendal considers to negatively impact the environment or society. Further information about what ESG factors and exclusionary screens are applied when making investment decisions can be found below in the ‘Investment Strategy’ section; and
  • access to the investment expertise of Pendal and other leading global investment managers.

The SB Fund is likely to 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. 

  • Minimum suggested time frame for holding the investment is 5 years.

Investment strategy

The Balanced Socially responsible option currently invests in the Pendal Sustainable Balanced Fund (SB Fund). The Pendal SB Fund seeks exposure to securities and industries that demonstrate leading ESG and ethical practices and exclude companies not meeting the investable criteria. The sustainable and ethical criteria employed included factors such as:

  • environmental issues,
  • social practices,
  • corporate governance, and
  • ethical practices.

Pendal actively engages with the management of the companies and issuers they invest in to manage risk, effect change and realise potential value over the long term. This is a multi-manager fund operated by investment manager Pendal Institutional Limited (Pendal) that considers environmental, social and governance (ESG) factors when making investment decisions via sustainability and ethical criteria outlined below.

  • Management of environmental impacts through the implementation of best practice environmental techniques, technologies and product design, for example life cycle impact assessment is currently an assessment tool Pendal use to assess best practice product design.
  • Environmental performance against a range of environmental indicators including for example, greenhouse gas emissions, energy and water use and environmental incidents.
  • The capacity to consult key stakeholders in relation to activities that may have significant environmental impacts such as reportable non-compliance breaches or regulatory fines/penalties.
  • Adoption of best practice with regards to management and disclosure of material risks and opportunities (which is likely to have a positive or negative financial impact (in the range of 5% to 10%) on a company or issuer’s earnings of valuation of assets)  associated with climate change.
  • Equal opportunity, anti-discrimination and industrial relations policies and practices.
  • Staff incentives, development and training.
  • Employee benefits and entitlements.
  • Human capital management performance against a range of indicators, such as voluntary turnover and gender diversity in senior management.
  • Products or services that provide positive social impacts such as improved health & community well-being, disease prevention, and education.
  • Management of contractors and suppliers.
  • Workplace health and safety performance against indicators such as fatalities and lost time injury frequency rate.
  • Codes of conduct and the extent of their integration into the company’s operations.
  • Provision of regular and appropriate training.
  • Whistleblower policies and procedures.
  • Ethical conduct and performance of employees and officers – the extent to which companies are adopting principles in areas such as complying with the law, fair and open dealings and accepting responsibility for their actions.
  • Product safety and consumer protection.
  • Engagement practices with employees, shareholders and key community stakeholders.

For fixed interest securities issued by Government related entities covered by Pendal’s sustainability research database, Pendal does assess the related sustainability characteristics mentioned above, and typically prefer issuers with higher sustainability ratings.

The criteria applied to the SB Fund’s investments may exclude some industry sectors, companies or issuers from the SB Fund’s ‘investable universe’. For this reason the SB Fund’s performance may vary when compared to other funds that do not apply sustainable or ethical criteria in their investment process. This risk should be considered when deciding whether to invest in the SB Fund.

The SB Fund is an actively managed diversified portfolio that invests in Australian and International shares, Australian and International property securities, Australian and International fixed interest, cash and alternatives.

The SB Fund may also use derivatives. The SB Fund has a higher weighting towards growth assets than defensive assets. Sustainable and ethical investment practices are incorporated into the Australian and international shares, Australian and international fixed interest and part of the Alternative investments components of the Fund. All other investments by the Fund are not assessed for sustainable and ethical investment practices.

Pendal also has a dedicated ESG research team, Regnan, which supports and informs investment decisions through its in-house research, engagement and advisory functions. Investments are selected based on a range of sustainable, ethical and financial criteria as outlined above in sustainable assessment process.

The SB Fund actively seeks an exposure to securities and industries that demonstrate leading ESG and ethical practices, as outlined above in the sustainable assessment process, while avoiding exposure to companies with activities or behaviour considered to negatively impact the environment or society by adopting exclusionary screens.

Exclusionary screens for each asset class are noted below:

Exclusionary Screens – Australian Shares

The SB Fund’s Australian shares investments will not invest in companies which directly1:

Fossil Fuels

  • Extract or explore for fossil fuels (specifically, coal, oil and gas); or
  • Derive 10% or more of their gross revenue from fossil fuel-based power generation, or from fossil fuel refinement or distribution (coal, oil and gas)*; or
  • Derive 10% or more of their gross revenue from the provision of supplies or services which relate specifically to fossil fuel extraction or exploration (coal, oil and gas)*.

Uranium

  • Derive 10% or more of their gross revenue from directly mining uranium for the purpose of nuclear power generation.

Logging

  • Derive 10% or more of their gross revenue from unsustainable forestry or forest products, including non-Forest Stewardship Council certified forest products or non-Roundtable on Sustainable Palm Oil certified palm oil production.

Gambling

  • Manufacture, own or operate gambling facilities, gaming services or other forms of wagering; or
  • Derive 10% or more of their gross revenue from the indirect provision of gambling (for example, through telecommunications platforms).

Pornography

  • Produce pornography; or
  • Derive 10% or more of their gross revenue from the distribution or retailing of pornography.

Weapons

  • Manufacture or distribute controversial weapons (including cluster munitions, landmines, biological or chemical weapons, nuclear weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments); or
  • Manufacture non-controversial weapons or armaments (including civilian firearms or military equipment); or
  • Derive 10% or more of their gross revenue from the distribution or retailing of non-controversial weapons or armaments (including civilian firearms or military equipment).

Alcohol

  • Produce alcoholic beverages; or
  • Derive 10% or more of their gross revenue from the distribution or retailing of alcoholic beverages.

Tobacco

  • Produce tobacco (including e-cigarettes and inhalers); or
  • Derive 10% or more of their gross revenue from the distribution of tobacco (including e-cigarettes and inhalers); or
  • Supply of goods or services specifically related to the tobacco industry (for example, packaging or promotion).

Animal testing

  • Undertake animal testing for cosmetic products; or
  • Undertake live animal export.

Predatory lending

  • Provide products or services with lending practices that are unfair or deceptive to ordinary borrowers, including small amount short term loans at higher than commercial rates of interest (for example, payday loans, pawn loans or the use of aggressive sales tactics).

Breaches and misconduct

  •  have been found to have significant breaches of social or environmental norms or regulations, or are subject to serious and substantiated allegations of unethical conduct, which Pendal considers have not been remedied or adequately addressed.

Exclusionary Screens – International Shares

The SB Fund’s international shares investments will not invest in companies which directly1:

  • Extract or explore for fossil fuels (specifically, coal, oil and natural gas); or
  • Produce tobacco (including e-cigarettes and inhalers); or
  • Manufacture controversial weapons (including cluster munitions, landmines, biological or chemical weapons, nuclear weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments).

The SB Fund’s international shares investments will also not invest in companies which derive 10% or more of their gross revenue directly from:

  • Fossil fuel-based power generation, or fossil fuel distribution or refinement (coal, oil and natural gas)*;
  • The production of alcoholic beverages;
  • Manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering;
  • Manufacture of non-controversial weapons or armaments;
  • Manufacture or distribution of pornography; and
  • Uranium mining for the purpose of nuclear power generation.

Exclusionary Screens – Australian and International Fixed Interest

The SB Fund’s fixed interest investments will not invest in issuers which directly1:

  • Produce tobacco (including e-cigarettes and inhalers); or
  • Manufacture controversial weapons (including cluster munitions, landmines, biological or chemical weapons, nuclear weapons, depleted uranium weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments).

The SB Fund’s fixed interest investments will also not invest in issuers which derive 10% or more of their gross revenue directly from:

  • The production of alcoholic beverages; or
  • Manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering; or
  • Manufacture of non-controversial weapons or armaments; or
  • Manufacture or distribution of pornography; or
  • Direct mining of uranium for the purpose of weapons manufacturing; or
  • Extraction of thermal coal and oil sands production.

Exclusionary Screens – Alternative Investments

A component of the SB Fund’s alternative investments will not invest in companies or issuers which directly1:

  • Produce tobacco (including e-cigarettes and inhalers); or
  • Manufacture controversial weapons (including cluster munitions, landmines, biological or chemical weapons, nuclear weapons, depleted uranium weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments).

A component of the SB Fund’s alternative investments will also not invest in companies which derive 10% or more of their gross revenue directly from:

  • The production of alcoholic beverages; or
  • Manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering; or
  • Manufacture of non-controversial weapons or armaments; or
  • Manufacture or distribution of pornography; or
  • Direct mining of uranium for the purpose of nuclear power generation; or
  • Extraction of thermal coal and oil sands production.

Exclusions may be updated, from time to time, following review and approval by Pendal.


*Companies with a climate transition plan may be exempted from this exclusion, provided that they have in place a Paris Agreement aligned transition plan and produce climate-related financial disclosures annually, which in both cases Pendal considers credible.

1All reasonable care has been taken to implement the SB Fund’s exclusionary screens. Pendal draws on internal and supplementary external research, believed to be accurate, to determine whether a company is subject to the exclusionary screens. As the nature and conduct of businesses may change over time, and publicly available financial or other information is not always comprehensive or up to date, Pendal do not guarantee that the SB Fund will meet all of these criteria at all times.

Disclaimer

All investment performance and unit pricing is net of tax and fees, except the weekly $1.30 Administration fee. Returns have not been adjusted for the affect of any fee capping arrangement. Investment returns are not guaranteed, and past performance is not necessarily a guide to future performance.

This information on this website is general information and does not take into account your specific financial situation, objectives or needs. You should obtain and read the Product Disclosure Statement (PDS) relevant to your account type, found here.

You should also read the Target Market Determination. You should consider obtaining personal advice from a licensed financial adviser before making any decision based on matters included on this website.

Your personal return will differ from the above performance figures depending on your investment option(s), when you joined the fund, transactions, fees charged, and investment switches.

In the instance of a unit pricing error for exited members, compensation will be paid where the amount of compensation is $20 and above.

To view your own investment option, and your personal investment returns, log in to MemberAccess. For more information about unit pricing, and investment returns are applied to your account, refer to the relevant Product Disclosure Statement.

Each Investment option (with the exception of the Direct Investment Option) pools member contributions, which are then used to purchase assets such as shares, property, bonds and cash for that option. The assets of each option pool are notionally divided into units – or a share of those assets. The value or price of each unit is determined by the value of the pool of assets. As the value of the assets increase, the unit price rises. If the value of the pool of assets decreases, the unit price falls. If you contribute additional money to an option, you buy more units. If money is withdrawn to pay fees or to pay you a benefit, units are sold. To calculate the value of your investment, you multiply the number of units you have been allocated in the option by the current unit sell price.

What we invest in

Portfolio holdings disclosures as at 30/06/2023