Australian super funds investing responsibly deliver stronger investment returns than their peers, a new report has found.
Research released Thursday by the Responsible Investment Association Australasia (RIAA), details the average performance of leading My Super responsible investment funds outperformed traditional super funds in their default products over a seven year span.
The increase in performance saw responsible funds grow returns by 87 basis points (0.87%) over three years, 74 basis points (0.74%) over five years and 56 basis points (0.56%) over seven years.
The Responsible Investment Super Study 2021 covers 53 asset owners, including the largest 48 superannuation funds in Australia regulated by the Australian Prudential Regulation Authority (APRA), as well as five other asset owners.
The study found for the first time responsible investment approaches are influencing strategic asset allocation for the majority of super funds, up to 55% from 39% in 2019.
This means that responsible investment is considered when allocation between different asset classes is rebalanced to meet financial return targets, reflect risk tolerance and time.
RIAA CEO Simon O'Connor said this year’s report shows super funds that are doing responsible investment well, are seeing their funds grow, leaving 'laggards' at risk of losing market share.
"Australians are realising the often superior financial performance of leading responsible investment super funds and are moving their money to reap not only the benefits for society and the environment, but their retirement savings as well," Mr O'Connor said.
The study found Australian super funds are improving their responsible investment practices, with 42% of total super assets in Australia covered by funds with such practices in 2020.
Further, the study showed that in the face of rising public concern and increasing financial materiality of climate change, 92% of super funds show that climate risk is actively assessed at a trustee/board level; up from 74% in 2019 and 64% in 2018.
Global Head of Sustainability for investment management company PIMCO, Ryan Korinke, said asset owners in Australia and New Zealand are bellwethers for sustainable investing in the Asia region and globally.
"This makes the results of this study showing their increasing commitment to responsible investment practices, particularly encouraging,” Mr Korinke said.
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|Advertised rate||Comparison rate*||Monthly repayment||Rate Type||Offset||Redraw||Ongoing Fee||Upfront Fees||LVR||Lump Sum Repayment||Additional Repayments||Pre-approval|
|FEATUREDSELF MANAGED SUPER FUND LOAN|| |
SMSF Loan (Principal and Interest) (LVR < 70%)
Liberty SuperCredit SMSF (LVR < 60%)
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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of January 17, 2022. View disclaimer.
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