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Pablo Berrutti

Responsible investment terminology 101

By Pablo Berrutti | Manager Responsible Investments and Sustainability
Tue, 10 Jan 2012

Part 1

Financial services comprises many specialities, often with their own language and acronyms. In one respect it is a natural part of specialisation, but unfortunately the language and acronyms can exclude others from both inside and outside the industry. Responsible investment (or RI (case in point)) is no different. This three part series aims to provide explanations of the RI terms and acronyms commonly used in financial services.

RI has changed over time which has resulted in different approaches being adopted. While the chart shown is framed as the ‘evolution’ of RI, this should not be taken to mean that later approaches are superior. Rather, all have their place and will suit different client needs. The first two (negative and positive screens) tend to be product focused, while the third (beyond screening/mainstreamed) is more focused on investment process. Today many investors and, in particular, thematic funds combine product and investment process approaches.

Process focused terminology
UN PRI (or PRI)
The United Nations Principles for Responsible investment were established in 2005 by a group of 20 institutional investors, in response to a request by the UN Secretary General. At their heart, the principles accept that environmental, social and corporate governance issues can impact investment performance and should be integrated into mainstream investment decision-making and ownership practices (stewardship, engagement and voting (see below)). We also use RI as short hand for responsible investment which includes aspects beyond the PRI.

ESG is the acronym for ‘environmental, social and corporate governance’. It tends to be used when discussing ESG factors, ESG issues, ESG management, ESG reporting etc. In practice ESG factors encompass almost everything that is not in financial statements but still affects a company’s performance. It is the story behind the numbers - whether a business adds value from its people or ESG factors are important drivers.

ESG integration is an approach to RI where investors seek to integrate ESG considerations into ‘traditional’ investment practices. The goal of ESG integration is to aid long-term investment performance. It does this in a number of ways, including by:

  • acting as a proxy or indicator of sound management or the quality of a business;
  • helping to identify and assess the financial and non-financial impacts of a range of ESG risks and opportunities; and
  • understanding more nuanced and less transparent drivers of investment performance like employee engagement, resource efficiency, and maintaining a social license to operate.

The reality is that many investors have been integrating ESG for a long time, it just didn’t have an official term. However, it is also true that with changes brought by globalisation, technological change, and complex ESG issues, investors need more sophisticated methods for understanding the investment implications of these issues. As a result ESG integration is part formalisation of existing practices and part enhancement and development of these practices to meet changing needs.

Part 2 to follow on 24th January.

Is the party over for retail property?

Anthony Cay
By Anthony Cay | Portfolio Manager, Property Securities

Anthony is the Portfolio Manager for the Property Securities strategy and Property Income strategy, as well as the Analyst covering Australian and Asian listed and unlisted property trusts.

Anthony joined Perpetual in December 1996 as a Trust Officer in the Private Clients business. From 2003 to 2006, Anthony worked as a Quantitative Analyst, running the Passive Property Fund.

In 2006, Anthony transferred into the Equities team as an Analyst, where he covered property trusts, and the healthcare, information technology, consumer discretionary, industrials and financials sectors. In 2008, Anthony became dedicated solely to property, taking on portfolio management responsibilities.

Anthony has a Bachelor of Economics from Macquarie University and is a Certified Financial Analyst.

Tue, 17 Apr 2012

There is a lot of debate within the property investment community about whether the party is over for retail property. Anecdotal evidence of the number of empty shops on your local shopping strip will definitely support this view. More »

What is concerning investors now?

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Wed, 11 Apr 2012

Global investor sentiment improved significantly in the new year as closure of the European Greek solution, combined with a massive liquidity injection from the European Central Bank (ECB) and signs of improvement in the US economy, prompted an extended period of ‘risk on’ in markets. However, more recently the continued disappointing European economic data combined with an end to the ECB’s liquidity injections (and the US Federal Reserve’s announcement that its often cited QEIII program had been suspended) saw the market’s four month rally peter-out fairly quickly. More »

Breville on the boil

Jack Collopy
By Jack Collopy | Portfolio Manager, BEc

Jack is the Portfolio Manager of the industrials portion of the Smaller Companies strategy and an Analyst covering small cap industrial companies across a range of sectors.

Jack joined Perpetual in November 2001 as an Investment Administrator and Equity Dealer. After four years, he moved into an Analyst role focusing on small cap industrial companies. Jack took on portfolio management responsibilities in June 2010.

Prior to joining Perpetual, Jack gained two years industry experience working in London as an Equities Dealer and Investment Administrator at both Salomon Smith Barney and Goldman Sachs Asset Management.

Jack has a Bachelor of Economics from the University of Sydney.

Thu, 05 Apr 2012

The share price of small electrical goods supplier, Breville, has made a stellar climb since the start of the year, especially since it issued an earnings update at the end of January. In February, it reported a strong H1 FY2011 net-profit-after-tax increase of 41%. More »

More worried about China or Spain?

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Fri, 16 Mar 2012

There was quite a sharp market reaction to Chinese trade data this week. On Monday, China recorded its first trade deficit in 22 years. While this is a significant development, it is not so bad that it signals a major slowing underway in China. More »

Should the RBA cut rates?

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Thu, 15 Mar 2012

Should there be some political pressure applied to the RBA to lower interest rates and reduce pressure on the Australian dollar? More »

The default you have when you’re not having a default

Thomas Choi
By Thomas Choi | Assistant Portfolio Manager / Credit Analyst CFA B.Ec

Thomas joined Perpetual in March 2008 and joined the credit team in May 2010.

Thomas’ focus is on cash dealing and management of liquidity within portfolios.  He also supports Perpetual’s TAA process which includes quantitative analysis and sector rotation, as well as analytical support for our Credit Scoring process. 

Thomas’ most recent role was within Perpetual’s Research and Analytics Team. In this role he was dedicated to supporting the Credit Team, provision of investment analytics such as attribution and portfolio analysis, and the active asset allocation process for Perpetual’s balanced funds.

Thomas comes from an investment management background having previously worked in a number of investment roles, including time at the hedge fund manager Prodigal as an Investment Analyst, and CMC Markets where he was a dealer on the trading desk.

Fri, 09 Mar 2012

Could this really be the beginning of the end for the Greek debt problem that has plagued financial markets for the past three years? More »

Should investors look at the small picture?

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Mon, 05 Mar 2012

This week's economic data in Australia has confirmed what Australia's company reporting season has been telling us; there is only modest growth momentum in both the economy and earnings at present. More »

Retail therapy

Paul Skamvougeras
By Paul Skamvougeras | Portfolio Manager, BEc, CA

Paul is the Portfolio Manager for the SHARE-PLUS Long-Short strategy and the Concentrated Equity strategy.

Paul rejoined Perpetual Investments in February 2010 as a Portfolio Manager, having previously spent seven years with Perpetual. He began his career with Perpetual in 1994 in a back office role, moving into a dealing role after three years, working his way up to the Head Dealer role.

Between stints at Perpetual, Paul spent seven years working at CPH/Ellerston Capital, where he had portfolio management responsibilities for an Australian long/short strategy for the first four years and a global long/short strategy for the last three years.

Paul has a Bachelor of Economics from Macquarie University and is a Member of the Institute of Chartered Accountants.

Fri, 02 Mar 2012

Over the past few weeks I’ve met with quite a few CEOs and CFOs who have described their operating environment as ‘challenging’. This has particularly been the case for companies in the Retail, Media and Building Materials sectors. However, even in those sectors ‘doing it tough’, there are some companies that are doing well. More »

Resource stocks and ESG considerations

Pablo Berrutti
By Pablo Berrutti | Manager Responsible Investments and Sustainability

Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.

Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.

Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.

Mon, 27 Feb 2012

Environmental, social and corporate governance (ESG) risks can have a more dramatic impact on stocks in the resources sector than in other sectors. However, despite high profile environmental disasters, like the Ok Tedi mine in Papua New Guinea or the oil spill in the Gulf of Mexico, a broad range of ESG risks can have less publicised, but material implications for long term company performance. More »

RMBS missing in action

Thomas Choi
By Thomas Choi | Assistant Portfolio Manager / Credit Analyst CFA B.Ec

Thomas joined Perpetual in March 2008 and joined the credit team in May 2010.

Thomas’ focus is on cash dealing and management of liquidity within portfolios.  He also supports Perpetual’s TAA process which includes quantitative analysis and sector rotation, as well as analytical support for our Credit Scoring process. 

Thomas’ most recent role was within Perpetual’s Research and Analytics Team. In this role he was dedicated to supporting the Credit Team, provision of investment analytics such as attribution and portfolio analysis, and the active asset allocation process for Perpetual’s balanced funds.

Thomas comes from an investment management background having previously worked in a number of investment roles, including time at the hedge fund manager Prodigal as an Investment Analyst, and CMC Markets where he was a dealer on the trading desk.

Thu, 23 Feb 2012

Since Australia’s major banks started issuing covered bonds in recent months the domestic securitisation market has remained largely dormant. The generous margin offered by CBA of +175bps over the benchmark swap/BBSW in their inaugural domestic covered bond issue, resulted in a significant repricing of both the senior unsecured and securitised debt markets. More »

Drink and be merry

Matt Williams
By Matt Williams | Head of Equities

Matt is Head of Equities and responsible for the strategic direction of the equities business and oversight of all investment strategies. He also provides support and mentoring to the analysts and portfolio managers in the team. Matt is the Portfolio Manager for the Australian Share strategy, the Pure Value Share strategy and 50% of the Industrial Share strategy. In the past he has managed the Smaller Companies strategy.

Matt joined Perpetual Investments in August 1993 as an Equities Dealer, before becoming an Analyst in 1997 and Portfolio Manager in 1998.

Prior to joining Perpetual, he worked as a Board Broker on the Australian Option Market and as a Cash/Bills Dealer at Lumley Corporation.

Matt has a Bachelor of Economics from the University of New England.

Wed, 22 Feb 2012

In what has so far been a fairly lacklustre reporting season, one highlight has been the profit result of Treasury Wine Estates. Over the first half of the financial year, the company achieved EBIT (earnings before interest and tax) growth of 18%, on a constant currency basis and its profits from sales into Asia were up 67%. More »

Company reporting season key for sentiment

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Fri, 17 Feb 2012

Australia is in its third year of earnings recovery post the GFC and while Australian stocks remain well-capitalised on the whole, local economic data, along with the strong Australian dollar and continued Eurozone uncertainty, are likely to culminate in low single-digit earnings growth throughout FY12. More »

The good news about increasing bank rates

Greg Stock
By Greg Stock | Portfolio Manager/Credit Analyst, B.Comm (Acc & Fin), ICAA, SIA, AFMA

Greg has been Portfolio Manager/Credit Analyst since joining Perpetual in August 2004. He is responsible for running the weekly credit process, researching non-structured issues (eg corporates, banks, infrastructure) and trades fixed rate securities.

Greg has over 14 years industry experience and prior to joining Perpetual worked at Macquarie Bank in financial operations, debt markets research and fixed income investment management. Prior to that he worked as an accountant at PriceWaterhouseCoopers.

Thu, 16 Feb 2012

The RBA has kept its Cash Target Rate at 4.25%. Despite this, banks have increased their lending rates to partially reflect the elevated funding costs they are incurring. Is there any good news in this story? More »

Responsible investment terminology 101 - Part 3

Pablo Berrutti
By Pablo Berrutti | Manager Responsible Investments and Sustainability

Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.

Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.

Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.

Mon, 13 Feb 2012

Product focused terminology: RI screening, negative screens, positive screens and the best of sector. More »

Timeo danaos et dona ferentes

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Fri, 10 Feb 2012

There is an old Latin phrase, 'timeo danaos et dona ferentes', meaning 'beware of Greeks bearing gifts' which had its origin in the tale of the Trojan Horse. Today, there may be a new saying 'beware of Greeks taking back gifts' following an agreement by Greek political leaders overnight to take new austerity measures allowing access to Europe's €130 billion aid package. More »

Bank hybrids - time to take cover?

Vivek Prabhu
By Vivek Prabhu | Portfolio Manager/Credit Analyst, B.Bus (Acc & Fin), ICAA, SIA, MBA

Vivek has been Portfolio Manager/Credit Analyst since joining Perpetual Investments in August 2004 and is responsible for credit analysis, portfolio construction and trading.

Vivek has over 15 years industry experience and prior to joining Perpetual worked for eight years at Macquarie Bank as an Analyst, Compliance Manager, Assistant Portfolio Manager (Fixed Interest & Currency) and Credit Analyst. Prior to that he spent four years as an accountant/auditor at Coopers & Lybrand (PwC).

Thu, 09 Feb 2012

In January, the Commonwealth Bank of Australia (rated AA-) executed the first domestic covered bond issue by an Australian bank. Whilst foreign banks have been issuing covered bonds for many years, the Australian Parliament only recently passed legislation allowing domestic banks access to this funding alternative. More »

An inconvenient truth

Thomas Choi
By Thomas Choi | Assistant Portfolio Manager / Credit Analyst CFA B.Ec

Thomas joined Perpetual in March 2008 and joined the credit team in May 2010.

Thomas’ focus is on cash dealing and management of liquidity within portfolios.  He also supports Perpetual’s TAA process which includes quantitative analysis and sector rotation, as well as analytical support for our Credit Scoring process. 

Thomas’ most recent role was within Perpetual’s Research and Analytics Team. In this role he was dedicated to supporting the Credit Team, provision of investment analytics such as attribution and portfolio analysis, and the active asset allocation process for Perpetual’s balanced funds.

Thomas comes from an investment management background having previously worked in a number of investment roles, including time at the hedge fund manager Prodigal as an Investment Analyst, and CMC Markets where he was a dealer on the trading desk.

Wed, 01 Feb 2012

If you are wondering whether the banks will pass on any future rate cuts, you should first ask whether they actually can. More »

Responsible investment terminology 101 - Part 2

Pablo Berrutti
By Pablo Berrutti | Manager Responsible Investments and Sustainability

Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.

Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.

Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.

Tue, 24 Jan 2012

ESG Engagement refers to the process of encouraging changes or improved practices from a company in relation to particular ESG risks, opportunities or issues. Engagement can take many forms from meeting with company management or boards; or the company’s advisors. It can be done in person, via teleconferences, in writing, or in extreme cases can be more publically aired. More »

Responsible investment terminology 101

Pablo Berrutti
By Pablo Berrutti | Manager Responsible Investments and Sustainability

Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.

Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.

Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.

Tue, 10 Jan 2012

Financial services comprises many specialities, often with their own language and acronyms. In one respect it is a natural part of specialisation, but unfortunately the language and acronyms can exclude others from both inside and outside the industry. Responsible investment (or RI (case in point)) is no different. This three part series aims to provide explanations of the RI terms and acronyms commonly used in financial services. More »

European ratings downgrades offsets improving US outlook

Matthew Sherwood
By Matthew Sherwood | Head of Investment Market Research

Matthew is Perpetual Investment’s Head of Investment Markets Research. In his role, Matthew conducts research on and acts as an external voice on the Australian and global economies, financial markets and portfolio strategies.

Matthew has extensive financial industry experience as an economist, investment strategist and central banker. Prior to joining Perpetual Investments in 2005, he worked as an Investment Research Manager at ING Investment Management and before that he was a Senior Economist with the Reserve Bank of Australia, where he gained significant experience in monetary policy formulation. Matthew has a Bachelor of Business from the University of Newcastle and a Masters Degree in Economics (Finance and Econometrics) from the University of Sydney.

Mon, 16 Jan 2012

Global investor sentiment improved in December 2011, as a lack of new developments in Europe prompted investors to focus on the improving nature of US economic data, which continues to indicate that a double dip recession should be avoided and that confidence is gradually improving. The positive US economic data has been supported by a good start to the earnings season. More »

Investing in a changing climate

Pablo Berrutti
By Pablo Berrutti | Manager Responsible Investments and Sustainability

Pablo is responsible for the design, implementation and maintenance of Perpetual’s Responsible Investment Framework. Pablo chairs the Investor Group on the Climate Change Research working group, and is a member of both the Low Carbon Finance and the Financial Services Council ESG working groups.

Prior to this role, Pablo joined Perpetual in 2007 as a Risk Manager in the Risk Group and has over nine years financial services industry experience.

Pablo has a diploma of superannuation and a certificate IV in financial planning. He is in the process of completing a graduate certificate in sustainability with the Harvard extension school.

Tue, 08 Nov 2011

Some interesting climate news over the weekend, with US Department of Energy estimating that global CO2 emissions for 2010 increased by a massive 6% over 2009 making it a record year both in the pace of the increase and total emissions. We have also seen a number of studies recently which use statistical analysis to explore links between some weather events and climate change including the 2010 Russian heat wave, increased risk of extreme rainfall in the northern hemisphere and English floods in 2000. More »

This information has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. The views expressed in this article are the opinions of the author at the time of writing and do not constitute a recommendation to act. Any information referenced in the article is believed to be accurate at the time of compilation and is provided by Perpetual in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor's capital.