Institutional investors that are signed onto the United Nations’ principles for responsible investment had a higher five-year average net return compared to non-signatories, according to a report by CEM Benchmarking Inc.
The benchmarking consultancy, which studied the net returns of 42 signatories participating in its database for five consecutive years ending in 2018, found that in Canada, the U.K. and the U.S., net returns were higher than the returns of institutional investors that weren’t signatories. As well, the PRI signatories saw a higher average total fund net value (0.53 per cent) added than non-signatories (0.01 per cent).
In the Netherlands, PRI signatories had lower returns, noted the report, which it attributed to the fact that non-PRI signatories in the country had larger fixed income allocations focused on immunizing their liabilities.
The report also found that being a signatory didn’t provide an advantage with respect to total fund cost. Indeed, PRI signatories were lower cost at 44.8 basis points versus non-signatories at 52.1 basis points on an absolute basis. However, based on fund size and asset mix, PRI signatories were more cost effective by 0.9 basis points.