Interview | David Palmer


We try to make a difference, to bring God’s work to the investment world. What an opportunity. How many people can make that claim? First and foremost we are an investment house. We are here to make good invest- ment returns for our clients. Bringing about better behaviours in society is part of our mission statement as well.


What changes have you made since becoming chief executive in 2017? We have a robust methodology that we have used for many years.


My colleagues were unwilling to back themselves in the past. Since I joined we have become much more convinced about our approach. In our UK equity portfolio we had 121 stocks a few years ago; today we are at 71. We are now backing ourselves more. We have a core conviction approach, so we have life-long conviction stocks, the big broad stocks that manage our risks. We are a low-risk portfolio. We get alpha and added value through our conviction stocks. So our methodology is the same as it was two, five, 10 years ago, but now we have more conviction stocks.


In other words, we are backing ourselves more and it has produced some good returns.


In the past 12 months, in a falling market, we are up almost 3% against our bench-


Affirmative Equity Fund performance (to 31 Dec 2018*)


7.5 10


2.5 5


0


-2.5 -5


-7.5 -10


-8.9% 1 year *Against benchmark 3 years 5 years 31 Aug 2001 Source: Epworth Investment Management 6.8% 4.7% 5.9%


Have you prepared your portfolio for the volatility that many expect? We stick to our knitting. We are long-term investors; we ignore the short-term aberra- tions that politics can bring us. So, are we seeing fundamental changes in our portfo- lios? No.


If we see economic trends that we need to follow, of course we will, but we are not trading out of stocks. We are in companies that will be here in 10 years’ time. We are long-term investors. You are not seeing wholesale changes in our portfolios because of Brexit. We are buying strong balance sheets and secure cash-flows.


You also manage capital for other faith- based charities. Tell me about that? Amongst the faiths that we act for, we have


extraordinary the assets that are available in the faith sector.


What we have through our Christian investing is a set of values that are visible, are transparent and not just faith investors are interested in. Our market is the ethical investment area in the charity sector. We start with the faith sector and it has a natu- ral expansion into other charities that like those values.


What fees are you charging?


In the affirmative funds, I believe that we are probably the cheapest among our peers. In the new funds that we are launch- ing we are going to be in the middle of the range. Being the cheapest limits your ability to invest by backing yourself. So we are increasing our fees. On the UK equity fund we are 55 basis points.


It is not about how many shares we own, it is about the voice that we have.


mark. That is an exceptional year and we will not repeat that, but over five years we are up against our benchmark. So given that we have that performance, the ethical exclusions and the engagement is a marvellous story. I am proud to work with a team like this.


20 | portfolio institutional | March 2019 | issue 82


Catholic, Baptist, United Reformed Church and some Anglican clients. Our ethical investing is driven by our Christian values, so we have a natural fit with the faith sector.


It might sound like a narrow sector, but in the couple years that I have been here it is


Your portfolios only feature cash, equities and fixed income. Why no alternatives? We have a new sub-class coming in the UK, which is multi asset. That will have small allocation to alternatives. Scheme rules allow us to have a number of alternatives. We are thinking infrastruc- ture and property. We are on a development range here. I would love to have absolute-return vehi- cles, risk-adjusted vehicles in the fullness of time. We will start with a global equity fund and a multi-asset fund. In our evolu- tion, absolute-return vehicles are just down the road.


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