The preferred investment manager for UK community foundations, CCLA, have been recognised for their ethical credentials, beating Henderson Global Investors and Newton Investment Management to win a Charity Times Better Society Award.
The awards were announced a glittering ceremony at the Millenium Hotel in Mayfair, and required CCLA to demonstrate that it had conscientiously considered its investment decisions in an ethical and fair way, and produced exceptional returns for its clients.
CCLA manages OCF’s Community First Endowment Fund, which invests monies raised as part of the UK government’s match-funding scheme. OCF’s endowment is invested in CCLA’s COIF Charities Investment Fund, whose annualised total return performance (gross) was +14.7% in the year to 31 March 2015. In OCF’s experience CCLA charges modest annual fees and has a solid investment team, and strong culture of thinking about governance and sustainability as part of the investment decision-making process.
CCLA thinks a lot about responsible investing. The flagship COIF fund employs an ethical screen, which excludes companies involved in production of weapons prohibited under UK law (land mines and cluster bombs) and companies that derive more than a third of revenues from tobacco, pornography and online gambling. The diligence process for new investments includes screening for transparency and sustainability in the context of governance and ethics. CCLA monitor positions closely, and where governance concerns arise they will first try to engage and if unsuccessful will divest. The emphasis CCLA places on its ethical approach is striking relative to the broader UK fund management industry.
CCLA also offers an Ethical Investment Fund, which further restricts the investment universe to exclude companies involved in any area that could be considered controversial. This includes companies deriving more than 10% of revenues from alcohol, tobacco, gambling, pornography and coal – areas which some may view as unethical, and which others may view as a necessary evil to offer freedom of choice to consumers. The Ethical Fund was formed in 2009 and performance has been similar to that of the COIF flagship fund, but has slightly lagged in four of the last five years. OCF takes the view that further restricting the investment universe is likely to be a drag on returns over the long term, and therefore that it is not in the best interest of OCF beneficiaries to add additional restrictions to the work that CCLA already does on governance and sustainability.