Home' Superfunds : Superfunds August 2016 Contents Rock star CEO, Phil Vernon is wowing city markets by day with
upbeat spreadsheets and music tragics by night as a punk
guitarist in a heavy metal Alternative Anthems gig. One of the
nation’s largest and fastest growing ethical super funds, Australian
Ethical is disrupting investment markets in much the same way
alternative music rose from the 80s underground fringe to peaks of
With its Australian Shares option consistently outperforming peers over
the past decade and savvy digital marketing tapping into rising consumer
demand for sustainable products, new members are flocking to Australian
Ethical at a rate of over 600 a month, encouraged they can both help save
the planet and turn a profit from new-world, environmentally sensitive
As demonstrated by commitments made at last year’s Paris Climate
Summit, political and shareholder demand for responsible investment is at
a tipping point, destined, Vernon says, to shift capital out of “the old fossil-
fuel-based economy into a new economy based around renewable energy,
improved energy efficiency and sustainable products.”
Australia’s tipping point is officially at 47 per cent, with Responsible
Investment Association Australasia (RIAA) reporting in July that 47 per cent,
or $633 billion, of assets under management in Australia in 2015 were
invested in ‘responsible’ investment funds, outperforming mainstream
funds by more than five per cent. RIAA’s Benchmark Report 2015 found the
average return for responsible investment funds was 8.3 per cent over the
past year, compared with a Large Cap Australian Share fund average return
of 3.2 per cent and the ASX 300 Accumulation Index return of 2.6 per cent.
“As investors become increasingly concerned about the effects of
climate change,” Vernon says, “they become more frustrated with the
lack of political action and look for opportunities to use the power of their
investments to drive positive change.
“Increasing numbers of fund members are moving their money to
Australian Ethical because they want their money do good both for them and
the planet. Our net inflows reflect this, reaching $319 million during the 12
months to 30 June 2016, 78 per cent higher than in 2015.
“We have busted the myth that investing ethically comes at the cost of
good returns. Our Australian Shares option has returned 8.7 per cent for the
past 10 years, beating its benchmark by nine per cent. Recent performance
has also been particularly impressive, returning an average of 12.9 per cent
per annum over the three years to June 2016.”
Vernon’s ethical compass was largely set by his parents, both of them
“hardworking, community-minded, principled people,” Vernon says. He
was just 12 when his father, then-editor of the Campbelltown-Macarthur
Advertiser, died unexpectedly of a stroke, catapulting the family into a single-
parent household living off a pension in Sydney’s outer south west.
“My father’s early death left me with two characteristics,” Phil explains,
“one, realising you have to pull yourself up by your bootstraps and find your
own way, and two, a strong sense of equity and social justice; for example, I
would not have made it to uni without the Whitlam reforms.”
Vernon’s mother Stella received an Order of Australia Medal for her
community work, The Advertiser describing her as a “one of Campbelltown’s
human treasures” when she passed away last year at 88.
“My mother’s legacy was to teach us all the value of wisdom, compassion
and the drive to make change and get things done. She had all three in
spades and all three working in unison is what creates a strong society and
will lead to a better world,” says Vernon.
Much of Stella Vernon’s philosophy is mirrored in the Ethical Charter that
guides Australian Ethical’s approach to investment and community advocacy.
Her son’s decision in 2009 however, to leave a 22-year career in mainstream
financial services and move into what was then the niche area of ethical
investment, was prompted in part by insider exposure to the carnage of the
global financial crisis (GFC) and the corporate misjudgments of the likes of
insurer giant HIH and the behemoth Tasmanian logger Gunns.
Vernon worked two stints at Perpetual, initially managing corporate
finance and later building its securitisation business, which coincided with
Superfunds August 2016
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