Future Super: moving beyond equities and bonds to new asset classes

Tl; dr

  • Future Super is a $300 million retail superannuation fund that was launched as Australia’s first fossil-fuel free fund.
  • In addition to avoiding investments in fossil fuels, Future Super invests in renewable energy. Future Super also leverages its members active interests in campaigns around climate change.
  • Future Super plans on extending investments out from equities and fixed income into other assets.

Future Super, the first fossil-fuel free superannuation fund in Australia, is moving forward with plans to expand its investment ethos beyond equities and fixed income into new asset classes.

Simon Sheikh, co-founder, Future Super

Future Super, founded by former GetUp! national director Simon Sheikh and Adam Verwey, a former senior manager in business development and marketing for Australian Ethical Investments, has gathered more than $300 million in assets under management since launch in 2014. The fund has always had a firm focus on avoiding fossil fuels, investments in renewable energy, and also encompasses social material issues well.

“People are finally realising that best in class is a redundant concept,” Simon says. “You need to align the ethics of your fund with the ethics of your customer base rather than your ESG provider.”

The fund invests in Australian equities and global equities via exchange traded funds (ETFs), such as its investment in international equities via the Betashares Global Sustainability Leaders ETF (ASX: ETHI).

“We’re 18 months into our partnership with Betasahres and using ETFs means that the more of our strategy that is being deployed with ETFs, the greater our focus can be on the niche asset classes – finding those financial returns with the social and environmental perspective,” Simon says. “By shifting our core offering into ETFs, it means that in the fixed income space, in the alternative assets spaces , we can be focusing on deals that can add other returns to our members. The way we think of it is that we do our thorough ethical screening on our ethical holdings, but add sustainability positive screens to bring in companies with positive impacts like renewable energy.”

Future Super’s investment strategy is in line with feedback from their member, which is leading them to develop other investment products beyond just the superannuation fund offering.  Simon notes that the fund will make formal anoucents later in the year.

“On the non-super side, our customers are leading us,” he says. “There’s demand to invest outside of super in new and innovate, transparent ways and our partnership with BetaShares has been great with ETHI and [The BetaShares Australian Sustainability Leaders ETF (ASX: FAIR)] FAIR, and in the asset class diversification space – our customers are telling us that it’s to invest outside Australian equities, Australian fixed income and global equities. There’s also infrastructure, property, derivatives, and our goal is to have that diversification in the portfolio. To date, it’s been very simple. Our focus has been largely on Australian equities, and a lesser extent developed market indices.  There’s nothing in the emerging market space, nothing in the derivatives space.”

Future Super has also just launched a new member portal, which the fund will use to engage with members on their experience in the fund as well as develop strategies for its engagements and campaigns.

“We have a lot of success with our quiet company engagement,” Simon says. “A lot of people think we’re a divestment lot, but we also engage with companies on a number issues. ”

Simon  notes that they engaged with Megaport on the issue, and Megaport has appointed their first woman board member. Simon also notes that Updater have also just appointed their first female director.

Gender diversity is an engagement priority for Future Super, Simon explains.

“We’ve added gender as a key theme,” he says. “We’ll have more  announcements with that later this year, but we’re moving beyond the board into executive teams, and looking at things like pay gaps in ASX100 companies because if you care about gender equality at the board level then you have to care about it at the executive level as well.”

Future Super also engages with its members, Simon says.

“We talk to our members about what we do invest in, and it’s increasingly about impact beyond listed equities,” he says. “That means a lot of engagement about making that real for people. We invited a group of investors to attend the opening of a solar farm we’re invested in, and it’s an experience second to none -people get so excited when they see what they’re investing in. The next step is to make that more real by show people local assets that they own – in the clean energy or infrastructure. We’re planning on technology that will allow them to follow the story of the investments on an app.”