Jame Thier, a founding director of Australian Ethical Investment, has retired from the company as of last week.
Australian Ethical is a fund manager with AU$650m in assets under management, specialising in ethical and sustainable investment since its 1986 inception. Australian Ethical has also founded the Climate Advocacy Fund, an index fund that aims to encourage improved corporate performance on climate change issues.
“I’ve been with Australian Ethical since the mid-90s after helping establish it in the mid 80s,” Thier said. “There have been some significant challenges through that time – the global financial crisis, 9/11, and there have been new products like the Climate Advocacy Fund as well. The company is now 50-odd people – when I started there was one full time employee and five directors. Everyone was doing everything.”
While intending to take time to travel, Thier will also continue to work as a director of independent research provider CAER. Thier is also still a director of Australian Ethical’s superannuation product, he said.
Reflecting on how the funds management industry and sustainable investing has evolved over the years since Australian Ethical’s founding, Thier noted that the idea of sustainability investing has become more mainstream since 2000.
“In terms of the marketplace, 2000 was clearly a big shift in ethical and sustainable investment,” he said. “That was when the mainstream funds that had watched us and watched Hunter Hall concluded that this is probably a market that’ s a real market, with a differentiation from the standard sorts of things, and worth looking at. I think probably some of the big changes came with the late 2000s as well with the GRI and ESG and PRI and all those sorts of things – all the acronyms that have swept through the industry in the last decade. For us, the Climate Advocacy Fund had been the pinnacle.”
Thier also said that given the regulatory regime around funds management today, it would be difficult for Australian Ethical to be established today in the way it was then.
“In the early days, we didn’t have a chief executive, legal counsel, a compliance officer,” he said. ”Those things came in in the mid/late 90s. If we had to establish an Australian Ethnical today, I’d be dubious if we could do it. It was fortunate for us that we had the people that were dedicated to it. In the early days, none of the executives got paid in cash. We wouldn’t have been able to find the capital and the things you needed, the people requirements like the compliance people and the legal people.”
Since 1986, Thier said, three “generations” of investors had come on board with Australian Ethical, each motivated by differing, evolving views.
“From our point of view, we have gone through I think three generations of investors,” he said. “In the early days, in the late 80s, people were investing with us because they thought it was a good idea. Many identified it as a charity and it took a long time to expunge those views. In the early days, people put their money with us because they wanted to do the right thing.
“The next generation saw that the returns were pretty ok and the ethics were great. The third generation, which came on in the early 2000s, are people who recognized that we were top of the pile in terms of returns – we offer great returns, and it’s nice about the ethics.”
Since inception, Australian Ethical’s balanced trust managed fund has returned 6.2% against its benchmark, the Morningstar Multisector Balanced, returning 6.7%. Its smaller companies trust has returned 9.1% since inception versus the benchmark S&P/ASX Small Industrials 6.1% return. The larger companies trust has returned 6.6% since inception, against the benchmark melded index return of 5.3%.
“I think that those people grew more knowledgeable about the ethics as they stayed with us,” Thier said. “We have always had a very loyal investee group. Returns aren’t’ the only string to our bow and they’ve learnt what we’re about. It’s an interesting change of perspective of who we were and what we were. We were never just about the returns – the returns follow the ethics.”