Perennial Partners has spun its ESG team and flagship ESG fund into a separate boutique investment business.
Perennial Better Future will include the Perennial Better Future Trust and the associated active ETF, the eInvest Better Future Fund (IMPQ) and will also manage ESG initiatives across the Perennial group.
The new boutique investment firm will be led by portfolio manager Damian Cottier, with Emilie O'Neill as ESG and equities analyst, and George Whiting who will head up the institutional and retail business development for the boutique.
"What it means is that myself, Emilie and George are really aligned in terms of driving the business forward," Cottier said.
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"It's really a coming of age to see the business investing into this because they believe in it and think it's a really important thing for us to be doing. We will have a lot more engagement in allocation and resources going forward."
Perennial Partners' broader distribution team and 15 investment analysts will provide additional support to Perennial Better Future.
"We'll still work with the rest of the asset management business and they'll continue to work closely with us," Cottier noted.
The intention will be to grow the Better Future business in future, but for the moment, the focus will be on the two products - the Better Future Trust and IMPQ.
Perennial Partners executive director Anthony Patterson said the Perennial Better Future business was born out of a passion for sustainable investment.
"The world of sustainable investment has made a 180-degree turn in the last 15 years. Today, an investment in a sustainable business contributing to a better future is far more likely to lead to better returns than investing in conventional businesses," he said.
"Perennial Partners has developed a leading-edge capability in sustainable investment and this business has been four years in the making. It launches having proven its investment thesis that benchmark outperformance can be achieved by investing in companies that are contributing to the improvement of society."
Since its inception in 2018, the Perennial Better Future Trust has returned 13.3% per annum. It has outperformed the S&P/ASX Small Ordinaries Accumulation Index by 6.2% per annum and the ASX 300 Accumulation Index by 5.6% per annum since inception to the end of March 2021.
O'Neill will remain part of the overall investment team within Perennial, but will focus on the Better Future strategy, she said.
Cottier said the strategy is predicated on finding companies that derive most of their revenue from positive outcomes, with zero revenue from harmful activities.
"We are focused on finding innovative smaller Australian companies. Many of the companies in the portfolio have entered into global markets and have significant growth potential - they are often disruptors in their chosen markets, improving health outcomes, increasing efficiency and reducing costs," he said.
The Better Future Trust has appeal to both institutional and retail audiences, Whiting said.
"Broadly, people come to a strategy like this for a number of different reasons, and we certainly feel that a strategy can offer different things for different investors," Whiting said.
"It is an institutional quality product, and we are seeing interest from the institutional landscape, but also very fitting to the retail and wholesale markets."