Hearts and Minds: Aiming to make a positive impact

Millennials are leading a global investment revolution, driving a change in how the super-rich invest their money.

According to a survey by Nuveen — one of the world’s largest investment managers — some 92 per cent of millennials agreed with the statement: “I care more about having a positive impact on society than doing well financially.”

Ethical and sustainable investing is booming and poised to accelerate. In fact, it is predicted that it will be one of the most important investment mega trends of the next decade.

The coming $500 million IPO of Hearts and Minds Investments deserves attention, mainly because it serves a greater purpose. Listing at $2.50 a share, Hearts and Minds offers investors exposure to a high-conviction portfolio of global equities from a selected group of fund managers such as Magellan, Regal or Caledonia, while also supporting Australian medical research institutes.

Fund managers and board members have waived their fees so the company can donate 1.5 per cent per annum of the average net asset value to a list of designated charities, regardless of performance. The rich backers of this float only participate as they expect to generate a healthy financial return, but combining these two goals is what modern investing looks like. At the time of listing the NAV is expected to be in line with the $2.50 offer price as all offer costs are paid by the Victor Chang Institute.

The company will allocate 60 per cent of the portfolio to stock picks from “star” fund managers and the other 40 per cent will be invested in recommendations presented at the Sohn Heart and Minds Investment Leaders Conference.

The success and profitability of the Hearts and Minds fund will depend on individual selections and there is a risk of capital loss just as with any other fund. But the concentration risk of the portfolio is somewhat limited due to the influence of a range of fund managers with different investment philosophies.

Overall, the IPO brings a high calibre team of fund managers with a strong track record of value creation while supporting a good cause. The float has been well marketed, and I hope this project delivers on its promise and prompt other fund managers to follow suit.

Simon Herrmann is an investment analyst at wise-owl.com


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