In this series of articles, the Wespath investment team provides its views on topical issues, market trends and ways it executes an investment program that aspires to produce excellent investment returns aligned with values.
2015-2016 Sustainable Investment Report
– This report provides a comprehensive overview of Wespath’s sustainable investment activities throughout 2015 and 2016. Wespath incorporates the consideration of environmental, social and governance (ESG) factors into investments across asset classes and in the selection of external asset managers.
Did Your Asset Manager Choose an Appropriate Benchmark?
– Choosing an appropriate benchmark is essential for providing investors a baseline for evaluating an asset manager’s success over the long-term. An inappropriate benchmark can make a skilled manager look ineffective or an underperforming manager look capable. However, choosing the right benchmark is subjective and not always straight-forward—it requires careful consideration between the asset owner and investment manager.
Case Study: Shareholder Engagement—Identifying Human Rights Risks
– This paper contains practical learnings and engagement questions to five key challenges faced by the extractives sector when implementing the U.N. Guiding Principles on Business and Human Rights (Guiding Principles)
. Wespath staff visited Newmont Mining Corporation’s (Newmont) mines in Peru to learn first-hand how one of the world’s largest gold producers integrates human rights concerns. Newmont’s experience in Peru demonstrates that a company can face real conflict despite its best efforts to faithfully implement the Guiding Principles
. The insights gained from this field visit can help investors better understand how global companies in multiple sectors are addressing human rights-related issues. This report was written by Daniela Jaramillo
, Sustainable Investment Specialist, and Kirsty Jenkinson
, Managing Director, Sustainable Investment Strategies.
The New "SRI": Sustainable and Responsible Investment
– For many years, religious and other values-based investors avoided investments likely to directly or indirectly support activities that were deemed unethical, manufactured harmful products or provided harmful services. Applying these types of ethical exclusions—or social screens—became known as Socially Responsible Investing or "SRI." Today, a new breed of investors is beginning to exert its influence across the investment landscape. This White Paper by Wespath's Managing Director, Investment Management Michael Lohmeier
and Managing Director, Sustainable Investment Strategies Kirsty Jenkinson
examines how the new SRI—Sustainable and Responsible Investment—is not just about excluding or screening based on an investor’s moral or ethical beliefs. Rather, it is analyzing the extent to which ESG factors will affect long-term performance and actively promoting policies and practices to thwart the adverse consequences of unsustainable activities.
New Equity-Based Fund Offering for ESG-Focused Investors
– This White Paper by Wespath's Director of Equities Brian Boyer
examines the Equity Social Values Plus Fund (ESVPF) which provides environmental, social and governance (ESG) conscious investors access to a globally diversified fund including mid- and large-cap companies with highly rated sustainable policies and practices regarding the environment, diversity, employee relations, human rights, product quality and safety.
Determining an Appropriate Benchmark for Private Real Estate Investments
– In order to assess the benefits of adding private real estate to a broad-based equity portfolio, it is necessary to choose an appropriate benchmark to assess performance of the asset class. This White Paper by Wespath Alternative Investments Manager Amy Bulger
examines the process for selecting benchmarks broadly and the challenges of applying that process to private real estate portfolios.
Enhancing Shareholder Value: A Case for Board Diversity
– The civil rights movement of the 1950s and ‘60s ushered in an era of new employment practices in this country. This shift in employment practices opened the door for more women and minorities to acquire the professional work experience necessary to qualify them to serve on company boards of directors. But despite these legislative changes, women and racial/ethnic minorities currently remain under-represented on company boards of directors. This White Paper explores the research regarding board diversity and best practice trends that indicates having a diverse racial/ethnic/gender presence on company boards has a positive impact on a company’s financial performance.
Understanding Fixed Income Returns: Past, Present and Future
– In today’s economic environment, much discussion is centered around the impact of rising interest rates on fixed income portfolios. This White Paper looks at how bond portfolios have performed over the years, the current interest rate environment and provides a framework for forecasting returns given the concern of rising interest rates in the future.
Secondary Funds: Adding Value to Private Equity
– An important element of Wespath’s investment philosophy is achieving diversification across a variety of asset classes; private equity serves an important role in achieving diversification within a portfolio of public equities. This White Paper by Wespath's director of equities Brian Boyer
, CFA, takes a closer look at private equity investments.
An Introduction to Proxy Voting
– Public companies hold annual meetings to conduct important business regarding corporate governance and other issues. Because the majority of shareholders do not attend these annual meetings, most voting takes place by proxy. This article serves as an introduction to the proxy voting process.
Multi-Manager Portfolios: Are Your Active Risks Appropriate?
– Carefully monitoring active risk exposures within each of its investment funds helps Wespath deliver competitive, risk-adjusted investment performance. The following White Paper describes specific active risk monitoring techniques Wespath utilizes at the individual investment manager level and at the multi-manager fund level.
Wespath’s Hedge Fund Strategy—The Path Not Followed
– While a wide variety of institutional investors embrace hedge fund investing as an integral and "sophisticated" element of their overall program, Wespath has concluded that the potential risk-adjusted return opportunities do not justify the requisite resources and costs required for prudently engaging in this popular form of investing. In the following White Paper, Dave Zellner
, Wespath's Chief Investment Officer, explains our rationale for declining to establish a significant investment of the assets entrusted to us by our stakeholders in hedge funds.
Fixed-Income Securities: A Foundation for Success
– This White Paper discusses the role fixed-income investments play in helping achieve financial objectives. It aims to help stakeholders understand fixed-income securities, their history, and develop a basic comprehension of their fundamental principles.
Consideration of Alignment of Interest in the Selection of Alternative Investment Managers
– This White Paper by Wespath's director of equities Brian Boyer
, CFA, addresses the issue of why alignment of interest is crucial when considering placing capital with alternative investment managers. It also summarizes the due diligence "best practices" used by Wespath in its assessment of alternative managers’ fiduciary standards. Wespath invests primarily in two alternative asset fund types: private equity and private real estate.
The General Board of Pension and Health Benefits and the United Nations’ Principles for Responsible Investment
– In 2005, Kofi Annan, then the United Nations Secretary-General, invited the General Board of Pension and Health Benefits of The United Methodist Church (General Board) to join 20 institutional investors in creating the United Nations Principles for Responsible Investment (UNPRI). This document outlines the six Principles and the ways in which Wespath Benefits and Investments applies them through its Wespath Investment Management division.
The Case for Alternative Investments in a Diversified Portfolio
– This White Paper by Wespath's director of equities Brian Boyer
, CFA, examines two types of alternative investments—real assets and private equity—along with best practices for administering these alternative investments in public equity portfolios. It also describes how Wespath’s alternative investment strategies add value to our public equity portfolios, and how the Wespath investment team has established a solid track record in both real estate and private equity investments.
Investor Rationale for Responsible Investment
– As an institutional investor, Wespath Investment Management adheres to our obligation as a prudent fiduciary. As a division of Wespath Benefits and Investments, a general agency of The United Methodist Church, we also understand that financial transactions carry ethical implications. These two perspectives form the basis of our well-rounded investment strategy, which utilizes traditional financial metrics and also considers the investment risk caused by environmental, social and corporate governance (ESG) practices. The topics covered in the Investor Rationale for Responsible Investment
document are also available as individual PDFs:
Positive Social Purpose Investing: Finding Uncommon Value
– This White Paper, authored by Michael Lohmeier
, Wespath Director of the Positive Social Purpose (PSP) Lending Program, discusses opportunities for Wespath investors to find value and earn excess returns. The PSP Lending Program has an exemplary track record of providing strong returns and a positive social impact in communities around the globe.
The Responsible Investing Penalty: Myth or Reality?
– This White Paper, authored by Wespath Chief Investment Officer Dave Zellner
, discusses the importance of environmental, social and governance (ESG) issues as they relate to corporate responsibility and long-term sustainable business practices. Increasingly, institutional investors have come to recognize that an understanding of ESG factors is critical to evaluating business sustainability and contributes to investment performance.