Medibank Private just seeded a new fund which excludes investment in “tobacco and controversial weapons” with $170 million.
Benchmarking is a very important part of performance measurement in the money management industry. It’s how money managers, and their clients, assess the performance of the fund, and the manager.
But benchmarks are more often than not a simple representation of the market they represent. So when a money manager buys a benchmark stock index, whether it is the ASX200, S&P 500 or any other aggregate measure of stock market performance, it means buying the shares of all companies that are part of that index.
That can be problematic for a fund manager, or client, who has an ethical objection to some of the companies in that index and is taking Environmental, Social and Governance (ESG) considerations into their investment decisions.
With that in mind, State Street Global Advisers today announced the launch of a fund built for Australian money managers who are interested in “responsible investing”. State Street said its new fund had been seeded with a $170 million investment by Medibank Private “which has a policy of not investing in tobacco companies”.
State Street said the new index fund “excludes more than 10 companies in its parent index, the MSCI World Index, which have significant business activities involving tobacco as well as those engaged in making cluster bombs, landmines, chemical and biological weapons and depleted uranium weapons”.
Medibank chief executive Craig Drummond said:
“We’re proud to be investing in a tobacco-free portfolio…This decision is just good business sense. Our mission for better health has to carry all the way through our business – from our employees and customers through to investments.”