Calvert focusing on DC plans in bid to boost institutional business

More emphasis on corporate defined contribution plans is part of the growth strategy of Calvert Investments Inc. under new President and CEO John Streur.

Institutional assets now account for $5 billion of Bethesda, Md.-based Calvert's total $13.5 billion under management. Mr. Streur took over Calvert leadership Jan. 1.

“It's too early for me to make that forecast” on how much the target is for institutional growth projections, said Mr. Streur in an interview, giving a perspective about both Calvert's prospects and asset owner transformation on the issue of socially responsible investing.

But he noted: “The corporate-sponsored (defined contribution) plan is a great source of business for us. There has been and continues to be a growing interest in adding responsible investment options to the DC plans. More and more companies have corporate social responsibility offices, (corporate social responsibility) reports, corporate social responsibility programs.”

“So companies themselves have identified the need to be a responsible player relevant to the environment, relevant to society and as a core business strategy of their own,” he added. “So it makes great sense for those companies to add these types of investment options to their DC plans.”

Calvert manages $3.5 billion for defined contribution plans in its mutual funds. Mr. Streur declined to name any clients.

On the defined benefit side, Mr. Streur said: “I can't say that the corporate DB players in the U.S, from my own experience, have been a big source of business.”

Calvert has some defined benefit relationships, but most of its retirement assets are on the defined contribution side.

In its new marketing outreach, Calvert intends to create a position in institutional business development, a process nearing completion, said Mr. Streur, who was president, director and principal of Portfolio 21 Investments Inc., whose investment and client service was merged into Boston-based Trillium Asset Management LLC. At Calvert, Mr. Streur succeeded Barbara J. Krumsiek, who retired. Calvert is a unit of Ameritas Life Insurance Corp., Lincoln, Neb.

As part of the strategy to expand in the institutional market, Mr. Streur said Calvert wants “to provide expertise in intellectual capital around responsible investing issues.”

That effort includes creating what he calls “public-facing research, essentially taking work that Calvert has been doing internally and putting it into a form to be shared with institutional clients to provide them with access to the insights that we have built over our 30-year history.”

“Lots of institutions are asking for this (research),” he said.

“There is a lot of learning that needs to be done in terms of what it means to make successful investments while taking into account matters associated with responsible investing and using (environment, social and governance) metrics. ... What institutions want to know right now is what is the impact of using ESG data in the investment process, what is the impact of factoring in a company's position in society in the investment process.”

“Institutions want to get a sense ... of how does this impact the portfolio, what does this mean to investment returns, how should we be thinking about the use of this information,” he said.

“That is something that Calvert has tremendous expertise on and we will share that information in white papers and we will also look to partner with academics who have been doing significant work on these matters and to move the body of knowledge forward and to share that with our institutional clients,” he added.

Calvert will “gain by establishing credibility,” he said.

“From an asset owner perspective, there is a growing awareness of the evolution of the corporations' role in society and the concepts around responsible share ownership,” Mr. Streur said.

“This impacts how large asset owners want to see investment decisions ... made,” he added.

“In addition to the traditional well-worn issues associated with creating financial value for shareowners, large asset owners also want investment managers to take a holistic view of a corporation and factor in how that company is impacting non-financial stakeholders, the society and environment.

“I wouldn't say that all asset owners are behaving this way but more and more asset owners are thinking of their role as responsible shareowners in this regard.” n