However, financial advisers are failing to ask their clients to consider ethical or socially responsible investments, Ms Round said, adding that many clients are ignorant of the companies represented within their portfolios.
“Most financial advisers do not pose this question to their clients because they are scared of being asked a question that they simply cannot answer,” Ms Round said.
“We aim to support financial advisers by making a host of material available to them, including guides to help them improve their knowledge and give them the confidence to answer the difficult questions they may face.”
Critics of socially responsible investment funds argue that the restrictions imposed by this investment approach make them likely to underperform non-SRI funds. But Ms Round insists that this need not be the case: “The record says it all. You do not have to forsake performance if you invest in a socially responsible way. Our funds have shown you can get good results over the long term.”
EdenTree was established in 1887 as Ecclesiastical Investment Management, an insurer to the Anglican Church to protect churches and church buildings from fire.
The firm’s rebrand last July to EdenTree played down its religious heritage to better reflect its position on socially responsible investments.
Ms Round said: “We found that the Ecclesiastical name could be a deterrent. Some clients are put off by the religious element – especially charities that are not able to support faith organisations. We came up with a name that we think appeal to the masses while keeping an element of our brand’s heritage.”
Ms Round has been fund manager of the Amity UK Fund – one of six retail funds offered by the investment manager – since its launch 23 years ago. The £137.4m fund was one of the first socially responsible funds available to retail investors.
EdenTree’s ‘profit with principles’ approach means generating good returns in a responsible manner, according to Ms Round. It avoids companies involved in such potentially morally dubious areas as alcohol, tobacco and animal experimentation.
The investment manager also positively screens companies – meaning its funds will buy shares in companies that are not usually associated with ethical investments but have initiatives deemed to have a positive impact on such areas as the environment and healthcare.
The due diligence process is also not without its challengesAn in-house team of analysts assesses the suitability of potential investments to determine whether they measure up to the company’s standards and values. This screening process is complicated by the subjective nature of ethical investing, according to Ms Round, who said: “We can’t be whiter than white, but we can make it clear what we invest in. It is not about us saying this is what you should do. I say if you have a problem with this area, then we will help you create a strategy that works for you.”
The due diligence process is also not without its challenges. Ms Round said: “Like any business, there is an amount you can take on trust, but you do need to see the evidence.
“We like to meet all the companies that we have invested in because you get a feel of how seriously they meet your questions in regard to ethics. Twenty-three years ago there were not a lot of companies that would respond to a question unless it was related to financial matters.”
Ms Round is a rarity in an industry in which long-serving fund managers are few and far between – not least female ones. Things could have worked out differently for her, but in 1979 she turned her back on a career as a fashion buyer to enter the financial service industry. She was a junior researcher at the investment management house Philip Hill for five years before joining the Ecclesiastical Insurance Group in 1984 as an investment analyst.
She said: “One of the things that was apparent during the 1980s was sexism. Part of my training was with a brokerage firm. The workers there were hugely sexist but also good fun. You could not be a shrinking violet in that environment.”
Data from FE Analytics confirm that Ms Round has consistently outperformed her peer group over the past 15 years from 2000. While admitting that some of those successes are down to luck, Ms Round stressed that most of her achievements were due to the firm’s policy of investing in companies for the long term while keeping portfolio turnover low.
“I have always found it better to keep things simple. If I can’t get to grips with a company’s business model or product, I think that the company is not explaining it well, or the proposition is too good to be true.”
Outside the office, Ms Round enjoys taking a hands-on approach in the management of her property portfolio in Turkey with her Turkish husband.
Myron Jobson is a feature writer of Financial Adviser
SUE ROUND’S CAREER LADDER
1999 - Present:
Director of group investments,
EdenTree Investment Management (formerly Ecclesiastical)
1988 - Present:
Fund manager,
Amity UK fund
1984 - 1988:
Investment analyst,
Ecclesiastical Insurance Group
1979 - 1984:
Junior analyst,
Philip Hill Investment Management Group
