Mr Piper said the fund had already begun searching for a merger partner ahead of APRA’s intervention, as smaller funds find it increasingly hard to compete in the $3.5 trillion sector. “The underperformance was not a function of the fund’s ESG [environment, social, governance] or ethical approach,” he said.

The responsible investment movement has been described as one of the fastest growing investment trends worth trillions of dollars globally, particularly in the superannuation sector, as investors seek to use capital to accelerate the green energy transition and other social initiatives.

Christian Super’s branding and board representation will be discussed as part of the merger negotiations, Mr Piper said, but the aim was to save costs by completing a full merging of operations. “The view is we’re not running as two separate organisations,” he said.

The merger of an ASX-listed for-profit fund with an industry fund, that returns profits to members, is novel for the sector. Although Mr Piper said this was a “non-issue” as both funds would benefit from maximising returns while maintaining the responsible investment thesis.

ASX-listed Australian Ethical chair Steven Gibbs welcomed the negotiations, saying research shows “more Australians than ever expect their money to be invested responsibly and ethically”.

The responsible investment movement has been described as one of the fastest growing investment trends worth trillions of dollars globally, particularly in the superannuation sector, as investors seek to use capital to accelerate the green energy transition and other social initiatives.

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Millennial-focused Future Super, which also has products that have been targeted by APRA for excessive fees, announced plans last year to merge operations with SmartMonday to create a $10 billion fund as it seeks to become the country’s largest ethical fund. 

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