Socially Responsive Shares
The Trust provides investors with a socially responsive investment. The Perennial Growth approach is one of socially responsive investing in a commercially prudent manner, through a proven and award winning investment process.
Fund Facts
Perennial Growth Management Pty Ltd has been certified by RIAA according to the strict disclosure practices required under the Responsible Investment Certification Program.
Investment Approach
Perennial Growth invests using a "growth" investment style. Perennial Growth believes that those companies with profitable growth prospects and also have a social conscience can generate value for shareholders and that these companies attract management interested in building businesses rather than merely managing them. Perennial Growth seeks companies that offer profitable growth prospects.
Investment Strategy
The Trust invests in a diversified range of industrial and resource companies listed (or soon to be listed) on the ASX. From time to time, international companies that meet the investment criteria may be considered for purchase. International stocks will not represent more than 10% of the invested portfolio.
To meet the investment objective of the fund, investments are selected using a two-tiered approach:
- Firstly, determining the investment quality of the stocks; Each stock is ranked by Perennial Growth, the investment manager, to identify potential investment opportunities. This ranking system aims to uncover undervalued companies that offer sustainable growth prospects. This is implemented via a combination of qualitative and quantitative techniques incorporating original and broker research and company meetings. From this group of companies, a smaller number are identified by Perennial Growth for potential investment opportunities. Reviews of the security selection are completed at least daily.
- Secondly, assessing the social responsiveness of those companies (those producing positive social outcomes, either through the nature of their core business activities and operations or through the goods and services offered).
PIPL has engaged the services of SIRIS, a specialist research group dedicated to analysis and assessment of corporate social responsibility.
SIRIS research enables screening and rating of companies based on social and environmental parameters, which have been constructed to meet the socially responsible aspects of the Trust's investment objectives. The data sourced from SIRIS is subject to a monthly review by Perennial Growth.
The key parameters used to assess individual companies cover a broad range of issues. These parameters enable SIRIS to assess the level of social dividend generated by Australian companies and selected global companies. Figures in brackets below indicate the weighting placed on each of the positive screens as at the date of this PDS.
These positive screens are:
- Environment management (37.5%); Companies are examined on environmental considerations arising from operations including pollution control and using renewable energy in the production of products.
- Corporate governance and ethics (15%); Analyses and assesses the manner in which organisational values are established, embraced and reported both internally and externally, as well as the engagement of stakeholders. This factor also incorporates the way in which these values are reflected in the organisation management process.
- Workplace management (15%); Human resources management, occupational health and safety and labour standards are analysed in order to evaluate each company. In assessing labour standards SIRIS reviews a company's track record on prosecutions in the areas of human resources, industrial relations and occupational health and safety. In addition, SIRIS favours companies who have the labour standard accreditations (e.g. AS/NZ 4804 - Guideline for workplaces to establish good occupational health and safety management systems).
- Regulatory compliance (13%); Analyses and assesses the role of regulation in an organisation's sustainability and the manner in which it organises resources and responds to its particular regulatory compliance regime.
- Product quality and stewardship (19.5%). Each company is assessed on strategies and actions taken when addressing issues arising from its operations. This includes analysis of company products with respect to their environmental and social considerations including the extent to which companies aim to develop and integrate with more durable, recyclable or renewable alternatives.
Negative screens are applied such that companies which engage directly in the following industries are excluded from the portfolio:
- tobacco;
- armaments;
- uranium;
- gaming;
- loggers of old growth forests; and
- inhumane testing on animals.
We consider a company to be engaged directly in an industry when they are primarily responsible for its operation, manufacture or production. It is Perennial Growth's intention to exclude any company operating negatively screened activities regardless of their significance within the entire company's operations. Where there is an indirect engagement in the above industries, they will not be excluded for this reason.
Perennial Growth realises securities where a company:
- fails to meet Perennial Growth's specific investment criteria;
- moves into a negatively screened industry according to the criteria above; and/or
- has their independent rating from SIRIS downgraded.
The SIRIS research contributes to both portfolio selection and the level of investment in individual companies.
Perennial Growth will use its discretion on the timing of the sale of securities should the realisation triggers be met.
The Trust will attempt to be fully invested at all times with the cash exposure not exceeding 5% for any length of time.
The Trust is authorised to utilise derivative instruments for risk management purposes, subject to the specific restriction that they cannot be used to gear portfolio exposure.
The majority of foreign currency exposure will be hedged into Australian dollars. The maximum foreign currency exposure in the Trust will be 5% of the portfolio.
