Within Parmenion Group we are the fund advisor for global, ethical investment solutions. The Parmenion Ethical approach is top-down oriented, with us mainly taking care of:
- Asset Allocation;
- Investment Manager / Fund Selection;
- Portfolio Management;
- Risk Management.
We follow a fund-of-funds approach, with the bulk of our fund portfolios filled by third-party top funds, selected by our analytical team and combined into the right portfolio mix for our clients using Parmenion Group’s quantitative models. For example, the bottom-up part (direct investments) is the responsibility of the ‘best-of-breed’ asset managers selected by us. Basically, we expect our active managers to outperform their relevant benchmark and peer group by at least 2-3%.
Direct investments by Parmenion Ethical itself are only possible in exceptional cases, when one of the following situations applies:
Whenever needed, we will collaborate closely with recognized specialist advisors to take these direct investment decisions. Our ‘hiring and firing’ methodology applies also to the direct investment component within our investment strategies. That is, whenever the direct investment component underperforms, we will – if possible – stop it and solve the investment problem differently.
Our performance analyses and evaluations are disclosed transparently in an open communication with the portfolio managers and our clients.
Being an Ethical Investment Advisor: Extra Layer of Responsibility
As an ethical investment advisor we have to incorporate an extra layer of disclosure and analysis vis-à-vis a ‘standard’ investment advisor. It is not just about finding the best managers or direct investment opportunities from a risk-adjusted return point-of-view, but they also need to comply with our two main sets of ethical guidelines:
Our team has been involved in ESG, Western-style, ethical investments in the European institutional investment market and we have seen this market grow spectacularly. And rightfully so. Being responsible, caring about sustainable solutions for our planet, embracing good governance and support of entrepreneurial initiatives that are ‘fair’ is important if one tries to preserve or improve a world that is faced with complicated challenges as the ones we are facing today. The United Nations Principles for Responsible Investment (UN-PRI) provide great guidelines that enable us to contribute positively to the global ethical agenda through our investments.
But we knew already for many years that Western-style ‘ESG’ ethics is not the whole story when creating fair solutions. In many cases financial and commercial contracts between market participants in the developed world incorporate (many) components and ingredients that hinder fair risk sharing, give unnecessary dominance to financial institutions who themselves take too much risk (as we saw in the Global Financial Crisis!) and/or make entrepreneurs forget the value of conservatism and careful, solvency-focused business funding. Islamic Finance brings added value in all of these areas; both for Muslims and Non-Muslims. Our solutions are Shariah-compliant as well, following the guidelines of our Shariah Board and AAOIFI, the Accounting and Auditing Organisation of Islamic Financial Institutions.
The combined UN-PRI- and Shariah-compliance creates ethical solutions that according to Parmenion Ethical comply with the following ‘equation’:
In the first quarter of 2017, Parmenion Ethical will launch its Triple F Ethical Fund, a closed-end private equity/venture capital fund consisting of three sub-funds in collaboration with our Group colleagues at Nicanor who will act as sub-advisor.
The core (50%) of the Parmenion Ethical Fund consists of a sub-fund investing globally (developed AND emerging markets) in best-of-breed funds that comply with our definition of ethical/fair. There are no direct investments in this sub-fund, but just mutual fund investments.
The second sub-fund (25%), Triple F Ethical EMFM Private Equity, focuses on emerging and frontier markets investments. It is a hybrid fund that invests the bulk of its assets (70 percent or more) in funds and the remainder in direct investments.
The third sub-fund (25%), the Fair Finance Fund Europe, is a direct private equity and venture capital fund focusing on investments in European small- and mid-sized private enterprises that comply with our Fair Finance guidelines.
The table below provides some general information about the Triple F Ethical Fund and the two subfunds with ISIN code.The third sub-fond, the Triple F Global Private Equity Fund, does not have its own ISIN code. It is the anchor component of the Triple F Ethical Fund. We recommend investors looking for a balanced, ethical private equity strategy to invest in all three sub-funds by going straight for Triple F Ethical.