On the 16th of April 2008 D. Ignacio Dolz de Espejo, Manager of the Morgan Stanley SR Fund, came to IE Business School invited by the IE Finance Club to talk about how social investments can be an option in the financial world, and that people who care about this issue have an opportunity to invest outside of the traditional investing world.

Mr. Ignacio Dolz has worked for several years in Morgan Stanley. Now, MS bank has been sold to Grupo LaCaixa, and therefore the fund will probably change the name in the short-term.

Mr. Dolz started talking about the creation of the fund and its history. The fund was created by Intermon Oxfam (ONG) and AB Asesores (small boutique bought by MS), and with the help of an ethic committee they launched it in March 1999.

The fund was created with an objective: «to promote the companies’ social responsibility as well as to obtain capital growth….»

Part of its management fee goes to ONGs, the client can choose which one. (Intermón Oxfam, Cáritas Española, Cruz Roja, Médicos Sin Fronteras, Entreculturas, Alboan and the Fundación para la Lucha contra la Esclerosis Múltiple.)

The fund selects the companies based on three criteria:

1.     The Ethical and SR investment policies of the companies.

2.     The Ethical Committee pre-selects the investment universe.

3.     Company investigation tools. (External and Internal).

To do these studies they use instruments like EIRIS (Ethical Investment Research Services). EIRIS uses 350 ethic and environmental indicators in 40 subsectors to classify the companies.

The fund searches for companies that protect human rights, follow the pharmaceutical deontological code, the Children’s milk International Code, and are against armament, nuclear and tobacco.

The fund also uses evaluating criteria: the committee assigns valuation to aspects as: Corporate Governance, environmental policies, human rights and stakeholder issues.

After having passed all this filters the Strategic Committee decides which stocks will form part of the fund and the specific weight inside the portfolio. Here they use only the company´s financial results, ratios and any financial instrument that helps them to decide between two companies of the same sector.

The fund was created with a weight of 25% Equity and 75% in fixed income. The variation of the equity was not very high as before (1999) the law did not allow many changes in the structure of the fund. Now a day Mr. Dolz said, it is better to have a 100% Equity Fund, as all the (developed) country debt is supposed to be ethical and also because funds can now a day´s change the percentage of equity and fixed income.

The investment of the Equity part is invested in companies from all over the world. (Vodafone, Enagas, Saipem…etc)

Compared with other funds like private equity or hedge funds or pure equity funds or even pension plans, this SRI Fund manages a very small quantity of money, but it is the start of a new option for investors. The team that work at this fund have demonstrated that ethical profits are possible and that people are thinking more on this issue.

From the IE Finance Club would like to thank Mr. Ignacio Dolz for his seminar and hope him great success in the future development of the SRI Fund.


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