by Stewart Oldfield
The Anglican Church is going wholesale, launching a range of institutional products aimed to put it at the helm of the country's ethical funds management industry. Not satisfied with a range of retail products and potentially the best distribution network in the country, the Anglican Church's wholly owned Glebe Group has this year turned to the task of winning over earthly gate keepers - the institutional asset consultants. It is hoping to build on the nation's steadily increasing interest in ethical funds investment, which although growing rapidly still pales in comparison to the penetration of the industry in the US.
Most existing Glebe retail clients are God-fearing retired or semi-retired folk, but the fund manager sees opportunities to tap the growing interest of younger people in socially responsible investment. It is targeting mandates from Anglican dioceses outside its Sydney home, other denominations and commercial institutions across the country. From their offices behind St Andrew's Cathedral in Sydney, a team of 10 professional investors manages more than $500million in shares, fixed interest and commercial property.
The Anglican Church claims to be the only religious organisation to have a full securities licence in Australia and has offered a range of trust products to the public for the past five years.
Like most church groups, the Sydney Diocese of the Anglican Church had long been asset rich but cash poor. That began to change about seven years ago when decisions were taken to invest in equities and fixed interest to help generate a more stable income flow, Glebe Asset Management chairman David Andrews said. As an ethical investor, the manager shuns exposure to the tobacco, uranium mining, alcohol, pornography, armaments and gambling industries in all its funds.
Glebe earns fees on about $100million of externally won mandates on top of $400million it manages for the Anglican Church in the Sydney diocese. The $100million is split between retail, mezzanine and two separate mandates. But Mr Andrews said the manager was aiming to have at least $450million of competitively won mandates by the end of 2005.
"People say why does a church suddenly build an investment operation, but the church has been a major institutional investor since the arrival of the first fleet," he said.
Glebe is launching a large-cap pooled Australian equities fund, a small-cap pooled Australian equities fund and a global pooled share und, each with a minimum $500,000 investment.
There will be zero entry fees and a management expense ratio of about 0.7 per cent. Glebe combines top-down market analysis with bottom-up company analysis and says there is merit in maintaining a tilt towards defensive sectors, such as financials, utilities and listed property, until there are better growth indicators. It believes that given the choppy nature of US economic performance, more volatility could be on the way. It likes the UK market more than continental Europe.
The Australian dollar is likely to end up at about US55¢ in a year's time despite signs that domestic economic strength might be waning. However, Mr Andrews's analysis appears to be based on traditional research sources. His desk is covered with the same broker reports that dominate any other fund manager's desk rather than any divine interventions.
Performance over the past five years to April has been solid, with the Australian equities portfolio generating an annual 13.2 per cent gross return compared with a 9.9 per cent return by the ASX 300. Like other managers, Glebe had suffered redemptions (not in a religious sense) during the recent market turbulence but was enjoying net inflows and growing market share, Mr Andrews said. By one measure, Glebe had potentially the best retail distribution network in the country, he said. But he added that it was not easy for parishioners to get a retail prospectus through a local parish.
"What we don't want is for someone to get the implication that they [clergy] are endorsing the product," general manager of sales and marketing Paul Harding-Davis said.
"We will try and make parishioners of the Sydney Diocese aware of these products by advertising in a local newsletter, seminars and targeting clients of an existing deposit plan," he said.