There is definite proof that sustainability-focused funds are outperforming their conventional counterparts. But some experts believe the traditional explanations for this are wrong.
SGI Management provides smoothed-growth funds, a $600 billion industry mainly provided by UK-based insurance companies. The SGI funds were previously managed by Circus Capital, a Hong Kong boutique that also ran a fund investing in British military spin-off technologies.
These are schemes sold by insurance companies that are 'with profits' because the asset managers smooth out returns, but because they are not marked to market on a daily basis, their actual performance is not transparent to investors.
Circus structured some products for the now-defunct financial advisory Towry Law, which mis-sold them to Hong Kong investors, often encouraging clients to use leverage. In 2005, Circus gave investors the option to transfer assets stuck in dud schemes to its own, better-performing smooth-growth products.
One of the two principals have subsequently left Circus, with Harvey Boulter spinning out the military spin-off portfolio into Proton Capital, while Paul Robison decided that the with-profits business needed to be institutionalised. The funds have been transferred to the recently created SGI Management, with Thompson brought in to bring experience from the traditional mutual funds industry.
SGI provides a fund of smoothed-growth funds, which Thompson describes as an offering in best of class. The asset class is a mainstream pension product in the United Kingdom, where it provides predictable, low-volatility returns, but is not readily accessible to investors in Asia, retail or institutional.
The $250 million Diversified Smooth Growth Fund has now built a three-year track record, returning 13.2-16.6% in that time, depending on the currency. SGI charges a 1.25% fee on top of the underlying fundsÆ fees, although the firm can access these at a discount. Thompson is in the process of negotiating distribution agreements in Asia and Europe, including consumer and private banks. He has also hired a distribution head for Asia in Hong Kong but was unable to disclose the personÆs name.
Thompson has 15 years of experience in the funds industry. He helped Goldman Sachs develop its international funds business and has worked at Fidelity. Everbright Prudential is Prudential FinancialÆs asset management JV in China with Everbright Securities.
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