Original article published on Good Returns by Matthew Martin.
Pathfinder moved into the KiwiSaver scene just over two years ago with chief executive and co-founder John Berry saying if anyone needed proof that ethical investment pays then this was it.
All of the company's KiwiSaver funds are in the top four for their categories to the year ending June 30 with its market-leading flagship Growth Fund 7.8% ahead of the growth KiwiSaver category average for the period achieving a return of 18.60% per annum over the last 24 months.
"And it has reached this delivering market-leading returns, proving ‘profit’ is not a dirty word," says Berry.
In December 2020, Pathfinder had $58.4 million of assets under management (AUM) and crossed the $100 million this week.
Pathfinder is the second smallest player in the KiwiSaver scene, Nikko AM had $63.2 million AUM as of June 30 this year.
"Can you invest ethically and at the same time make great returns? The answer is a resounding 'yes'," says Berry.
"We call this 'conscious capitalism’ or ‘stakeholder capitalism’ but the proof is there - you can avoid harm and do well with your investments.
"We’re ecstatic to reach the $100 million milestone and even more excited that we have reached it with fantastic return outcomes for our investors.
"Ethical investing does not come at a cost, in fact, we believe the opposite is true – accounting for environmental and social considerations should add to long-term financial returns.”
Pathfinder KiwiSaver has a unique social enterprise business model where it donates 20% of its management fees to charities selected by their members.
They have just added the New Zealand Anti-Vivisection Society (NZAVS) as their 18th charity and does not invest in companies that engage in animal testing or factory farming.
Its KiwiSaver investments include unique and impactful private investments like Sir John Kirwan’s technology-driven mental health app (Mentemia), large scale solar in New Zealand (Lodestone), biodegradable bandages (Wool+Aid), microfinance for women in South-East Asia (Women’s Livelihood Bond) and the tech-based democratisation of investing (Sharesies).
Last month Pathfinder was awarded Best Ethical KiwiSaver Provider and Best New Ethical Fund at the Mindful Money Ethical and Impact Investment awards.
“Congratulations to Pathfinder for rapid growth in their KiwiSaver and investment funds, and for strong financial returns," says Mindful Money chief executive Barry Coates.
"It should come as little surprise that credible ethical investment funds do well financially, as well as doing good."
Coates says they also benefit from loyal customers, motivated staff and no fines for environmental damage.
"Returns for ethical funds are also boosted by avoiding social, environmental and climate risks. For example, after repeated warnings of climate risk, ethical funds have avoided fossil fuels. The returns for other funds have suffered as the value of fossil fuel companies plummeted over the past six years."
Coates says the link between Environmental, Social and Governance (ESG) factors and share prices has only recently started to enter the market mainstream and is still not incorporated into many financial models.
But he says there's a growing understanding that ethical policies are good financially, as well as for people and the planet.
"It is one of the factors driving the rapid growth of ethical investing in New Zealand and internationally."