A relative newcomer to the South African money management scene has redefined the concept of socially responsible investing.
Instead of placing restrictions on what investments can and can't be made, African Harvest Fund Managers, Cape Town, donates a portion of its management fees to charities aligned to the aims of the investment fund.
African Harvest, a domestic money manager, has 8 billion rand ($1.2 billion) under management, 95% of which is from institutions.
Its new socially responsible fund, the African Harvest Women's Initiative Fund, supports community-based organizations involved in the prevention of violence against women and children, said portfolio manager Heather Jackson. To this end, the firm donates 60% of the 5% starting fee and 30% of its annual 1.5% management fee to charity.
The current beneficiaries are a 24-hour rape counseling and referral service; a 24-hour help-line and treatment service for abused children; and the victim support services offered by the National Institute of Crime Prevention and Reintegration of Offenders.
Launched late last year, the fund has only R19 million ($2.7 million) in assets, roughly half of which are institutional.
The 5% starting fee is waived for institutional investors and the management fee is negotiable, but the relative size of the institutional funds means the contribution to charity is similar to that from the retail investors, said Ms. Jackson.
The investment policy is "flexible" in that the managers invest at their own discretion. Among the top five holdings is Rembrandt Group Ltd., a Cape Town-based conglomerate with interests in tobacco. Noting other socially responsible funds likely would filter Rembrandt out of the portfolio, Ms. Jackson argued that "you can't achieve strong investment growth and have a social screening process."
With its donation structure, the fund is not profitable for African Harvest as a company. "But you can't grow in this market unless the market itself grows. It's very important that South African companies look at sustainable growth rather than focusing on a first-world `returns-only' type model," she added.