Methodists beat markets
07 Sep 2011
The ethical investment stance taken by the Central Finance Board of the Methodist Church’s has resulted in market beating returns, according to the manager’s latest report. The CFB has continued to vote down the majority of company remuneration reports.
The CFB manages over £1bn of investment capital using ethical investment practises on behalf of organisations within Methodism, and avoids stocks as alcohol and tobacco.
All the CFB funds have matched or beaten benchmarks net of fees over the past 12 months to 28 February, 2011, according to figures released in late August. The CFB UK Equity benchmark returned 17.2%, compared to the FTSE AllShare Index which returned 17%. The flagship CFB UK Equity Fund returned 18.3%.
The positive return marks a change from the previous report, where the CFB’s ethical benchmark trailed the market by 0.6 percentage points.
The CFB also gave company remuneration reports a firm thumbs down. Over the year to 28 February, 2011, the CFB’s remuneration policy resulted in only 12% of votes made in favour of company remuneration reports.
Bill Seddon, chief executive of the CFB, said: “We will vote often over remuneration packages because they are excessive. We would prefer to vote more often than not in favour, and it is a source of unhappiness for us that we are not able to.”
The CFB has continued to vote against remuneration reports in 2011, and Seddon expects the overall percentage of votes made against remuneration reports to be similar in the CFB’s 2012 report.
Seddon also said was pleased with the past performance of the investment manager, but performance has suffered ethical headwinds this year. Since February, the CFB internal ethical benchmark is down against market benchmarks by about 0.4 percentage points.
He said: “In more volatile markets, investors have been going for more defensive types of stocks. Which means things like tobacco stocks, which are the ones not included in an ethical index.”
The Methodists joins the £5bn Church Commissioners fund – the investment arm of the Church of England – in beating the market. In 2010, the Church Commissioners fund made 15.2% in 2010 while its benchmark, the WM All Funds Universe, returned 12.7%.
“The plans of the diligent lead surely to plenty, but those of everyone who is hasty, surely to poverty.” ~ Proverbs 21:5
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