Zenith launches Responsible Investment classification for investment products

Interest in Responsible Investing (RI) has increased materially in both the number of RI themed investments available and their traction in the market. Whether investors are seeking to ‘avoid’, by shunning investment in certain sectors, or ‘advance’ by seeking entities that have a positive influence, many investors want the option to incorporate RI preferences into their investments.

While we broadly consider the increase in RI strategies as a positive, we’ve observed that defining how investment managers integrate RI issues into their methodologies is an industry challenge. We believe advisers need clear, consistent disclosures that make it easy to understand what investment managers are actually doing when considering RI issues.

It’s our belief that individual investors are best positioned to determine the funds that are most closely aligned to their beliefs and values. As a result, advisers need the tools to determine an investment’s suitability for investors with varied sustainability goals.

Introducing Zenith’s Responsible Investment Classification

On 30 September 2020, Zenith launched its RI classification system across all rated products to better support advisers when assessing an investment product’s approach to RI. These classifications are broadly summarised below.

RI categories

Description

Traditional

Seeks to achieve a stated investment outcome with little to no regard for RI factors.

Aware

Seeks to achieve a stated investment outcome with consideration of a broad range of factors, including RI.

Integrated

Seeks to achieve a stated investment outcome, with formal consideration of RI factors that materially alter the product's permitted universe and portfolio allocations.

Thematic

Seeks to achieve an investment outcome with an explicit RI objective by investing in themes or assets specifically related to sustainability.

Impact

Targets investments aimed at generating a positive, measurable social and environmental impact alongside a financial return.

 

Ultimately, the classification system identifies the level of RI integration in the investment management process with reference to not only how managers assess RI and incorporate RI issues, but also their interaction and engagement with issuers of securities.

For more detailed information on the new framework and how it's applied across our rated funds, please visit the RI section

Questions relating specifically to Zenith’s RI classifications can be directed to RI@zenithpartners.com.au.

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