Australian Ethical launches fund built for mission driven-foundations, NFPs and wholesale investors
John McMurdo
Australian Ethical, a leading ethical fund manager, has announced the launch of the Australian Ethical Balanced Income Fund, developed in collaboration with Australian Impact Investments (‘Aii’).
The Fund has been designed for values-driven wholesale investors, including foundations and not-for-profits, seeking to invest in line with their mission. The fund applies Australian Ethical’s unique Ethical Charter across a multi-asset balanced portfolio and includes a dedicated impact allocation backed by the expertise of Aii.
The underlying Australian Ethical multi-asset strategy has a 36-year track record combining institutional-grade listed, private, and alternative assets and accesses real-economy opportunities across infrastructure, private debt, and sustainable assets led by Australian Ethical and it’s Ethical Charter. Aii will contribute specialist expertise in impact sourcing, due diligence, measurement and reporting to the impact sleeve that is designed to deliver positive, measurable social and environmental outcomes.
Philanthropic trusts and foundations in Australia manage more than $50 billion in investible assets[1], making their financial decisions a powerful lever for long-term stewardship. Sector research shows many foundations and not-for-profits are taking a more deliberate approach to how their capital is invested, looking beyond grant making to better align their investments with their purpose[2].
Australian Ethical Chief Executive Officer and Managing Director John McMurdo said trustees are increasingly recognising that it’s not enough for investments to generate income for grants if the underlying capital may be contributing to the very challenges their organisation exists to address.
“Foundations and not-for-profits have told us they want to manage their capital responsibly, while upholding their fiduciary responsibility to preserve and grow capital over time. This Fund has been designed to bridge that gap, bringing together income, diversification and a clear focus on impact within a single, professionally managed portfolio. It’s about giving organisations confidence their capital is working consistently with their purpose, without compromising on the financial outcomes they rely on,” Mr McMurdo said.
Australian Impact Investments Managing Director Kylie Charlton said: “We’re pleased to be partnering with Australian Ethical on a product that responds to the growing demand from foundations and not-for-profits to invest in line with their mission and values. With more than a decade of experience in impact asset consulting, we know that aligning capital is only part of the equation – investors want to understand how their investments are performing financially and confidence that their capital is contributing to a better society and healthy planet. Transparent annual impact reporting is an important part of that.”
The Reichstein Foundation, an Australian philanthropic foundation focused on social and environmental justice, is a cornerstone investor in the Fund. Reichstein Foundation CEO Rachel Ball said the Foundation was increasingly focused on ensuring its investment capital was aligned with its purpose: “As purpose-driven investors, we look for investments that can deliver financial returns and measurable impact. The Balanced Income Fund provides foundations like ours with a practical way to do both, aligning investment capital with purpose, while maintaining the diversification and financial outcomes needed to support our long-term objectives. We see this as an important development for the philanthropic sector as demand for values-aligned investment solutions continues to grow.”
While developed specifically for foundations and not-for-profits stewarding perpetual capital, the Fund also has broader relevance for wholesale investors seeking a professionally managed diversified balanced portfolio with an embedded impact allocation.
Australian Ethical Chief Investment Officer Ludovic Theau said: “Foundations and not-for-profits are increasingly looking to evolve how they invest their capital, but many don’t want the complexity of building and managing a bespoke solution. This Fund provides an implementation-ready approach – bringing together diversification, income and a dedicated allocation to impact within a single portfolio, supported by clear governance and reporting.”
The Fund targets CPI + 4.0% real returns over the long-term to support sustainable distributions, combining income generation, capital growth and diversification with exposure to investments designed to deliver positive, measurable social and environmental outcomes. It will provide transparent financial and impact reporting and monthly liquidity subject to availability.
