Post Conference Materials

Monday 29 October - SRI and Savings Plans in Asia Speakers & Presentations PANEL DISCUSSIONS: Exploring SRI Strategy from the Front Line パネル・ディスカッション: SRI戦略の最前線 Chair: Mr. Darrell Riley, Vice President, T. Rowe Price Group 116 KB Global Eco Growth Fund Panel: Mr. Jeremy Hall, Associate Director, Japanese Specialist Equities, Henderson Global Investors 171 KB NPI Global Care Fund Mr. Tadashi Hayami, Senior Fund Manager, Asahi Life Asset Management Co., Ltd. 95 KB Investment Process in Asunohane Mr. Euan Marshall, Director, Kingsway Fund Management 408 KB Managing an Asian SRI Fund Summary by Euan Marshall The afternoon workshop sought to look into the practical detail of managing an Asian SRI fund. In particular it focused on two issues: how SRI issues are incorporated into the portfolio construction process and how does the SRI component affect the risk and return of a particular fund. In an attempt to further give structure and to facilitate comparison each presenter tackled three themes during their talk: philosophy, process and performance. Representatives from three fund Houses Henderson, Asahi and Kingsway spoke highlighting interesting similarities and importantly contrasting approaches to SRI management which reinforced the notion that SRI is not a one size fits all solution. Jeremy Hall from Henderson spoke first. He highlighted the Henderson philosophy of identifying what they describe as "Industries of the future" where the investment management team seek to identify growth sectors where businesses are facing up to and in some cases solving the social and environmental challenges that confront us. They think that this coupled with a belief that corporate social responsibility is a proxy for good management can help inform the investment decision. To that end, they have an in-house research team and use a matrix which combines business sustainability with Corporate Social responsibility in the stock selection process. The results have been good and their Asian fund has performed well against an unadjusted benchmark and has outperformed since inception. Tadashi Hayami introduced Asahi's Japanese SRI Fund. The Asahi approach differs from Henderson firstly in their use of an external researcher. From an initial universe of 700 stocks the SRI researcher provides a compliant universe of 300 and a portfolio of between 50-100 is built using standard financial analysis. Unlike Henderson who constructed their own benchmark Asahi use a mainstream index against which to measure performance. A resulting concern is tracking error and how to manage the benchmark arising from the exclusion process. With diversification not an option they need to rely on trying to minimise the stock specific risk. They have an in house process which gauges the concept, strategy and operation of each business but that also recongnises the interlinked nature of the social, environmental and economic factors. The final presenter was Euan Marshall from Kingsway Fund Managagement who have just launched a regional asian (ex Japan) SRI fund. It is a value driven proposition that by the explicit consideration of social and environmental risk seeks to minimise stock specific risk in the portfolio. He presented some early analysis which showed that the Kingsway funds consistently have lower volatility than their respective indicies. Kingsway takes a third approach to incorporating SRI into the investment process. They integrate SRI analysis with their traditional investment work and embody it in the person of the fund manager. In this way they hope to be able to exploit SRI information asymmetry at the market level and generate superior investment returns. The Kingsway philosophy differs again by regarding SRI in Asia as a development mechanism. Through an active management process the fund will positively direct capital to smaller sustainable business in the region. The discussion that followed was varied and informed. Issues ranged from whether screening approaches add value, which is ast yet unproven, to how to use benchmarks given that 'one size does not fit all'. The conversation ended on an optimistic note from the audience with a member expressing his belief that in the next decade over 50% of money managed will be SRI.

Mr. Euan Marshall