Industry fund bumps up fee for ESG option

A $4 billion industry fund has increased the fee for its ESG option, which is managed by AMP Capital.

Legalsuper's Balanced Socially Responsible option will charge investor 10bps more in the indirect cost ratio (now 40bps). The buy-sell spread is also increasing by eight basis points, now 30bps.

The ESG option invests through AMP Capital's Ethical Leaders Fund.

It holds a portfolio of shares, fixed interest, property and direct infrastructure.

The investments are picked according to ESG criteria that include labour standards, climate change mitigation, human rights, child labour and the exclusion of tobacco, pornography, armament and gambling stocks.

Only 1% of the fund's members are invested in the option, according to its annual report for the FY19.

Its recent return has been on par with the MySuper balanced option, but it falls behind on 10-year annualised returns.

The ESG option returned 6.8% in the year to June end, while the 10year annualised return is 7.6%. MySuper balances, where almost half of the fund's members are invested, returned 6.9% in the year and 8.4% p.a. over the 10 year period.

LegalSuper will change the long-term risk level of the ESG option from medium-high to high, meaning its likelihood of negative returns over a 20-year period will be 4-6 years instead of the previous 2-4 years.

Read more: AMP CapitalLegalSuperMySuper
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