New Ethical Screen for Church of England (And NOT Because of Wonga)

(January 30, 2014) — The Church of England has appointed MSCI as its new ethical screening partner, following a competitive tender process.

The Church Commissioners fund—which is a hybrid pension/endowment—hit the headlines last year after it was discovered that a private venture capital fund it held invested in controversial payday lender Wonga.

The Church fund has not directly invested in door step lenders, payday lenders, and pawn brokers for some time, but due to the opaque nature of private venture capital arrangements, there was no way for it to know about the Wonga holdings.

Contrary to some media reports, today’s appointment of MSCI as an ethical screening partner is in no way related to the Wonga story of last July, the Church’s CIO Tom Joy told aiCIO.

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The fund’s ethical investment advisory secretary Edward Mason expanded further, saying the bespoke screening in support of the church’s policies on high interest rate lending offered by MSCI was also offered by the previous ethical screen partner EIRIS.

Instead, it was MSCI’s breadth of coverage across the investable market that won them the tender, Mason said.

“We had a competitive tender and there were some very good bids that came in. We felt MSCI best met our needs, as set out in that tender process…because of their wider coverage,” he added.

The Church fund has subscribed to MSCI ESG (environment, social governance) Research’s full suite of products to ensure that global companies in which they invest meet their ethical investment standards. Key aspects of this work will cover an investment universe of more than 9,000 companies and include:

1) Screening for companies involved in faith-based exclusion criteria such as tobacco, adult entertainment, gambling, defence, and weapons

2) Bespoke screening in support of policies on high interest rate lending and, for CCLA’s Charity Ethical Fund clients, energy coal extraction

3) Identification of companies involved in major controversies or that have breached UN Global Compact standards.

The church’s national investing bodies have also subscribed to MSCI ESG IVA ratings to support the integration of material ESG factors into their engagement and portfolio analysis processes, and to examine the potential for further ESG integration.

(January 30, 2014) – Chinese regulators gave the green light to the nation’s first insurer-backed mutual fund in late December 2013, and within 10 days of opening, the China Life AMP Money Market Fund had raised RMB 11.9 billion (US$1.97 billion).

The fund is a joint venture between a domestic powerhouse—China Life, the country’s largest insurer—and its longtime strategic partner, Australia’s AMP Capital.

“Our relationship with China Life was absolutely critical in launching this fund,” Anthony Fasso, AMP’s international chief executive, told aiCIO. “It would not have been possible to enter the industry without a partner on the ground.”

The formal relationship between the two firms dates back nearly eight years. In August 2009, they furthered their mutual commitment with a strategic cooperation agreement. That gave rise to the money market fund, which is China Life’s first asset management venture with a foreign partner on the insurer’s home turf.

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The relationship is also far from over, according to Fasso, who heads up AMP’s partnership strategy and has spent the last two decades based in Hong Kong.

“The next step would be to issue more funds,” he said. “In China, firms typically launch one mutual fund, raise it, release it out into the market, and then launch another fund in three or four months’ time. Then another. The natural progression would be from fixed income to domestic equity, and on to a domestic balanced fund. Eventually, we may look at international assets.”

The market could absorb that and much more, according to Boston-based research firm Aite Group. By its calculations, 88% of investable individual wealth in China was as of yet unmanaged. Private banks led in market share with 7%.

“China represents perhaps the biggest prize available in the global wealth management sector,” wrote Senior Analyst Stephen Wall in a January 24 report. “But its market characteristics—scale, regulatory environment, infancy, and speed of change—present a tough and evolving challenge for any wealth management business, big or small, local or foreign, to prosper.”

The partnership of China’s largest direct institutional investor and a foreign asset manager with more than a century of experience has proved itself a contender.

For AMP, at least, the stakes are high. Its commitment to both the Asian market and strategic alliances goes beyond China Life: The Sydney-based company recently sold 15% of its asset management arm to Mitsubishi Financial to facilitate access to Japan.

What’s next in the partnership pipeline for AMP? Nothing imminent, according to Fasso. “I’d say we’ve got enough on the go at the moment.”