Melior’s fund has been selected based on its strong performance since inception and the increasing interest by both advisers and their clients to move beyond funds offering negative screens towards those seeking to contribute to a better future. The fund recently became the first Australian large companies manager to be classified as ‘Impact’ by Zenith Investment Partners and was awarded a ‘Recommended’ rating.

Since its July 2019 inception, Melior’s Australian Impact Fund has outperformed its ASX300 benchmark by +2.8% pa, with an absolute return of +9.7% pa (net of fees as at 31st May 2022). The fund tracks ESG KPIs vs ASX300 on a quarterly basis and releases a detailed impact report on an annual basis. The impact report outlines how the fund has delivered positive environmental and social outcomes through its impact capital, active corporate stewardship and public advocacy.

“Until now, impact investing has generally been the domain of illiquid investments and wholesale investors, but with our approach to impact in listed markets we aim to democratise this investment offering to a broader investor base who want their capital to deliver not only competitive returns but positive social and environmental impact” said Melior chief executive Lucy Steed.

Melior announced last year that Grok Ventures, the private investment vehicle of Mike and Annie Cannon-Brookes, had taken a minority equity holding in Melior and made a long term investment in the fund, reflecting an increased commitment by the couple to the fast growing impact investing sector.

“Being able to offer what we believe is the first large cap, Australian equity fund to advisers and their clients who use these platforms is a major milestone,” Ms Steed said “We are seeing a groundswell among Australian investors that want their capital to have a positive impact on the world and a growing awareness of greenwashing.”

Melior was named by the Responsible Investment Association Australasia (RIAA) as a “2021 Responsible Investment Leader”; ranking equal 2nd out of 198 investment managers, with only 4 of the top 10 being headquartered in Australia.

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The rating by Zenith follows the recent naming of Melior by the Responsible Investment Association of Australasia (RIAA) as a “Responsible Investment Leader”, ranking 2nd out of 198 investment managers.

Melior’s chief executive, Lucy Steed, said the rating by Zenith was a welcome endorsement of the rigorous impact, ESG and financial frameworks and advocacy approach employed by Melior since launching its Australian Impact Fund more than two years ago.

“We are delighted to achieve a Recommended rating in our first Zenith review and to be the first Australian large companies manager to meet Zenith’s impact fund requirements,” Ms Steed said. “We believe that purpose driven companies with strong ESG and financial credentials have the potential to achieve superior returns and our approach has consistently demonstrated this.”

Since its July 2019 inception, Melior’s Australian Impact Fund has returned +37.1%, outperforming the ASX300 by +16.3% (net of fees)^[1] as at 30 September 2021. Over its 2- year track record, the fund has also delivered impressive performance against mainstream large-cap peers, with consistent top quartile performance^[2] .

In its report, Zenith praised Melior’s engagement with companies, describing its approach to ESG as “comprehensive” and its differentiated investment approach and ESG investment framework to be “market leading”.

Melior, which has quadrupled funds under management in the past year, announced last month that it had secured Atlassian’s Mike Cannon-Brookes and his wife, Annie, as cornerstone investors and equity holders in the business through their private investment vehicle, Grok Ventures. The manager has recently moved into the adviser market with their impact fund now available on platforms such as Macquarie Wrap, Hub24 and Netwealth.

Melior was launched in 2018 by Ms Steed and CIO Tim King after the duo identified a gap in the market for an investment product that delivered positive social and environmental impact which contributed to the Sustainable Development Goals as well as competitive returns.

Melior is also backed by Adamantem Capital Managing Directors, Rob Koczkar and Anthony Kerwick, who are majority shareholders.

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[1] Past performance is not a reliable indicator of future performance.
[2] Peer group: Morningstar Category – Australian Large Growth, Blend and Value. Guidelines.

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Mr Castillo was most recently at Ellerston Capital where he was part of a team of six managing around $3 billion in Australian equities. He also previously worked as a senior portfolio manager and Australian equities analyst at AMP Capital.

Melior’s chief executive, Lucy Steed, said the appointment of Mr Castillo would provide the boutique impact investment group with additional analytical resources as it continues to grow its funds under management.

“Carlos is a welcome addition to our team and brings significant fundamental and ESG experience which will further enhance our offering as an early mover in the public equities impact investing space,” Ms Steed said.

“The skills Carlos brings are a natural fit with our objective to deliver competitive returns for our investors, while at the same time, helping to improve outcomes for people and planet by encouraging companies to do better.”

Melior was established in 2018 by Ms Steed and Chief Investment Officer Tim King as one of the country’s first dedicated public equities impact investors. It invests only in Australian and New Zealand-based listed companies that it views as having a positive environmental or social impact aligned to the Sustainable Development Goals (SDGs).

The Melior Australian Impact Fund, launched in July 2019, was ranked in the top 10 large cap equities managers by Rainmaker in its first financial and calendar year. The fund returned +40.5% (after fees) in the year to March 31, outperforming the S&P/ASX 300 by +2.2%.

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Lucy Steed

Australian public companies are increasingly embracing the need to play a more active role in ensuring a sustainable future for all, according to a report issued by impact investor Melior Investment Management.

Melior’s inaugural Australian Impact Report highlights a growing recognition among corporates that improved performance on sustainability through positive impact is not only good for the planet but good for business.

“There’s probably never been a more important time for public companies to step up and help contribute to solutions that support positive environmental and social outcomes,” Melior chief executive Lucy Steed said.

“We are definitely seeing, from the discussions we are having with companies, greater acceptance that social and environmental considerations need to be paramount in their decision making.

“Not only are investors demanding more positive action, there is a sense from many companies now that they should deploy their capital in a manner that helps meet the challenges we face as a society.”

The report highlights the work of Wesfarmers on gender inequality, noting the company has targets in place for female executives and board members and a gender pay gap target of +/‐5%.

“Our analysis of ASX300 companies has found that there is a significant lack of disclosure around gender pay gap data and pay equality targets and Wesfarmers demonstrates strong leadership in this area,” it says.

Property group Dexus is applauded for its positive impact regarding sustainable infrastructure and green buildings and New Zealand energy groups Meridian and Mercury for their work on reducing inequalities.

Melior’s engagement with corporates during the year, however, identified some glaring inadequacies, such as a poor level of basic data reporting on workforce inequalities and lack of disclosure of Greenhouse Gas Emissions by nearly two thirds of ASX300 companies.

Melior was launched in 2019 by Ms Steed and chief Investment officer Tim King after the duo identified a gap in the market for an investment product that delivered positive social and environmental impact as well as competitive returns.

Backed by Adamantem Capital founders, Rob Koczkar and Anthony Kerwick,  Melior invests in Australian and New Zealand companies that deliver outcomes aligned with the UN Sustainable Development Goals (SDGs).

In its first year, the Melior Australian Impact Fund outperformed the benchmark ASX300 by 9.4 per cent with an absolute return of 1.8 per cent and was ranked by Rainmaker in the top 10 Australian large cap equities managers.

Melior’s performance has since strengthened, with figures for the year to August showing the fund outperforming the index by 11.2% with an absolute return of 6.4%.

“These figures prove that investing for impact does not come at the expense of financial performance,” Ms Steed said. “In fact, we are increasingly seeing evidence that there is a strong alignment between outperformance and socially and environmentally responsible investment practices.”

Last week Melior was named by the Responsible Investment Association of Australasia as one of 29 funds (out of 165 assessed) recognised as practicing a leading approach to responsible investing.

Melior differs from other responsible investment funds in that it does all of its research inhouse. Companies must pass a four‐step process for portfolio selection to be considered for the fund. As part of this process, Melior has developed several proprietary tools, including a carbon calculator that allows it to estimate the carbon emissions of ASX300 companies.

In its first year, Melior conducted 67 advocacy meetings with a range of companies including Brambles, BlueScope, Sims, Telstra, A2 Milk, Wesfarmers and Meridian.

The Impact Report details three key themes aligned to the SDGs pursued by Melior through its engagement with corporates during the year ‐ gender equality, reduced inequalities and climate action.

“Gender equality and broader inequalities such as modern slavery, inadequate workplace safety and lack of indigenous reconciliation are key societal issues which we believe Corporate Australia has a critical role to play in addressing,” the report says.

“We also estimate that the Scope 1 greenhouse gas emissions of the ASX300 are equivalent to approximately one third of Australia’s national emissions, highlighting the critical role that ASX companies have in driving forward emissions reduction and therefore climate action.”

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