How I invest - Adam Verwey, SIX founder and CEO
Disclaimer: Information in this blog is general in nature only. What is right for me might not be right for you. Any mention, or opinion, of a company is not a recommendation to buy or sell. You should do your own research or seek personal financial advice before investing to ensure you make decisions that are right for you.
I’ve had a long career in ethical investment and love talking about the powerful impact we can have with our money. I also enjoy giving my opinions about the ethics of different companies.
In my previous roles, I’ve had the privilege of managing super fund money on behalf of lots of people. I’ve taken a bunch of lessons learned from that and applied it to how I invest my own share portfolio.
Some of the lessons I’ve learned are:
- everyone’s ethics differ, but most ethical investors agree on the big things. We all want a planet that’s not just liveable, but thriving, and we want a society where people are treated fairly and have opportunities for a good and healthy life;
- even the best stock pickers rarely outperform the market;
- if you’re investing over the long term then it can be easier to ride out the bad times on share markets; and
- there’s a lot more fulfilment out of investing in things that help make the world a better place. It’ll make the good times even better, and the bad times more tolerable.
Investing in ethical ETFs
It can be good to have a diversified portfolio. I want my money to be invested ethically, so I invest half of my share portfolio into two sustainable ETFs, ETHI and FAIR. I’m a bit biased as I helped design the indexes that these ETFs are based on, and was a part of the Responsible Investment Committee at Betashares. From my experience in that role, I know these two ETFs are very thorough with their ethical screening. Importantly, that means having a zero tolerance for things that really matter to me, like fossil fuels, armaments, gambling, live animal export and tobacco. On top of this, they also have some positive screening that preferences companies that are involved in positive activities like healthcare, education and carbon leadership.
You can read the ethical profiles for these ETFs in the SIX app.
Investing in themed ethical ETFs
I invest about 25% of my share portfolio in ETFs that have ethical themes that appeal to me. I want to invest in and support smaller companies, as well as themes like renewable energy and healthy foods. I also know that I don’t have the time (or willingness) to research every company in every theme so that I can pick the best ones. Instead, ETFs provide me with an easy way to be invested across many companies across each of these areas.
ERTH and ACDC allow me to invest in portfolios of companies that I believe will benefit from, and be leaders in, the transition needed on climate change. IEAT allows me to invest in a portfolio of companies focused on future food systems and plant-based foods. Our energy and food systems are critical to fast and meaningful action on climate change.
IMPQ allows me to trust an active fund manager to select investments in small and medium-sized Australian companies that rate well on environmental and social sustainability. Smaller companies are the one area where I think active managers have the potential to outperform the market. However, I have a poor track record for choosing small companies myself, so I’m happy to let Perennial’s fund managers do that for me!
You can read the ethical profiles of these ETFs in the SIX app.
- ERTH Betashares Climate Change Innovation ETF
- IMPQ Perennial Better Future Fund
Investing in companies I like
Even though I’m not great at stock picking, I still like to do it. So I invest about 20% of my share portfolio across 12 different companies that I’ve selected for a variety of reasons. It’s a mix of companies that I either know really well through ethical research, or where I use and like the company’s products. It also includes some small companies where I know I’m taking a bit of risk. However, I’m not a stock picker and don’t spend time doing financial analysis, so the smaller, riskier companies have definitely been some of my worst investments - I won’t share those names!
Four of the bigger individual companies in my portfolio are Fisher and Paykel Healthcare who make sleep apnea machines, financial software company Xero, (my old employer) ethical funds manager Australian Ethical Investment, and death care services company Propel Funeral Partners.
That last one might seem a bit of an odd holding. Death care is an important service, and it’s one that we need at a very vulnerable time. I like Propel Funeral Partners as they are adding competition to an industry that has been historically dominated by a single company in Australia, Invocare, that has now been bought out by a private multinational company. If it’s an important service you’re required to use at a vulnerable time, then it’s best not to be at the whim of a monopolistic company.
You can read the full ethical profiles of these companies in the SIX app.
- FPH Fisher and Paykel Healthcare
- XRO Xero
Investing in companies I don’t like to drive change
The last 5% of my portfolio is investing in companies that are part of SIX’s shareholder activist campaigns. I started buying companies for activism purposes when I joined the board of ACCR about 10 years ago. I’ll admit it felt a bit gross at first to buy fossil fuel companies - but you get over it quickly. These companies aren’t benefiting financially from my minimum $500 investment, but the ability to use this small investment to make change from shareholder resolutions feels great.
Not all of these activism shareholdings are companies that make me feel gross. For example, I think G8 Education is providing an important childcare service for many people. But they should also be a better employer and provide paid parental leave to their workers. Some of these companies are listed below, but check out our Campaigns page to see all the companies that are part of SIX’s shareholder activism campaigns.
WOW Woolworths: JOIN CAMPAIGN
COL Coles: JOIN CAMPAIGN
GEM G8 Education: JOIN CAMPAIGN
NAB National Australia Bank: JOIN CAMPAIGN
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