Podcasts | December 3, 2019

Cornerstone Capital seeks to prove active managers can deliver impact in public equities

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ImpactAlpha, Dec. 3 – With the portfolios of most investors, individual and institutional, heavily weighted toward public equities, investment advisors have struggled to find stock market strategies that deliver impact along with competitive returns.

The strategies they did find often had high fees and high investment minimums, putting them out of reach of retail investors looking to invest in companies pursuing impact themes such as inclusive fintech, sustainable water and other environmental solutions. 

“When we looked around to find these solutions for our clients, it didn’t exist,” Cornerstone Capital Group’s Erika Karp said in an interview for ImpactAlpha’s Returns on Investment podcast. “Global thematic impact didn’t exist, so we decided to build it ourselves.”

Cornerstone’s Access Impact Fund is a Nasdaq-listed mutual fund that for a minimum $1,000 investment offers access to sub-advisors looking for thematic investment in small-, medium- and large-cap companies across geographies. As of Monday, the fund, which trades under the ticker CCIIX, had net assets of $4.9 million (Karp says her nephew was the fund’s first investor, investing his bar mitzvah gifts). 

According to the prospectus, the fund’s sub-advisors include Schroders, RBC Global Asset Management, KBI Global Investors, ARK Investment Management and Green Alpha Advisors. Those advisors will be looking for companies in the “circular economy,” climate and clean energy, health and wellness and economic opportunity.  

Karp, formerly the head of global sector research at UBS Investment Bank, is taking a stand on hotly debated investment topics that go beyond impact investing. She says active management, which in recent years has fallen out of favor because of high fees and uneven performance, is key to intentional impact. The sub-advisors, she says, “are all engaging with the companies to understand the risks and opportunities. With active management, you are more likely to drive change. Skilled managers, thinking long term – this is how you get to sustainable and responsible investment.”

The prospectus notes that Cornerstone has agreements through the end of 2022 to cap the gross expense ratio at 1.35%.

As for public-equities investing, she says, “We need the pension funds. We need the endowments. We need the sovereigns. We need trillions. This is why you need the public equity markets, and have to find the managers who really get it.”