Dave Zellner is Chief Investment Officer at Wespath Institutional Investments, which oversees over $26bn in assets for the United Methodist Church in the United States, and also Chair of FaithInvest. He discusses how the United Methodists approach their investment responsibility and the opportunities and challenges of faith-aligned investing.
CONTENTS
00.00 – 00.39: Introduction:
00.40 – 04.29: Organisation & background
04.30 – 10.17: Values & Methodology
10.18 – 18.49: Impact Investments
18.50 – 24.29: Broadening service offerings
24.30 – 30.39: Looking forward
PODCAST
The interview is also available for you to listen to as a podcast.
OVERVIEW
The United Methodists approach their investment responsibility by focusing on fiduciary duty to the beneficiaries while making a significant effort to align investments with the beliefs of the Church:
Work towards a sustainable economy framework: Social Cohesion, Prosperity for All, Environmental Health
Incorporate the sustainable economy goals within your investment process and – to the extent possible – with your managers
Avoid, Engage, Invest – start by excluding companies in clear violation of your principals, engage with your investments to improve them, proactively invest in making the future better
Wespath manages $24 billion for the United Methodists and related parties in alignment with the United Methodists (such as The Evangelical Lutheran Church in America)
Investments based on United Methodist Church Social Principles
Over 120 faith-based clients in the OCIO program
Combination of retirement, foundation and employee benefit assets
Centrally managed funds provide US, international, fixed income, inflation protection and specialized exposures to clients
Because of the make-up of its clientele (all faith-based not-for-profits), Wespath is not registered with the SEC nor is it subject to DOL oversight or ERISA
Wespath’s staff consists of 24 people in four teams:
Investment management which oversees all portfolios and client reporting
Impact Investment overseeing internal and external impact portfolios
Sustainable Investment Services which spearheads Wespath’s significant commitment to shareholder engagement
Institutional Investment Services – which provides sales and client support for the OCIO efforts
In every asset class, Wespath endeavours to deliver top quartile risk-return results while incorporating faith-based directives:
All managers are encouraged to adopt the PRI standards and are engaged on progress and improvements
Public markets managers are given an exclusion list (which excludes things such as weapons, alcohol, tobacco, gambling, adult entertainment) and encouraged to incorporate the concepts of Sustainable Economy within their processes
5% of the portfolio is managed internally in a lending programme to support affordable housing; this is decades-old programme that aims for market-rate returns
Engagement is done in coordination with various partner groups and includes proxy voting efforts