Drive Sustainable Investment Opportunities through KPO

SSON News and Analysis
Posted: 07/09/2012

A company's sustainability approach and program will become more important over the next several years - why shouldn't shared services  and outsourcing step up and deliver? Change Investment Management Pty Ltd (Change) is a specialist fund manager investing in the sustainable global opportunities presented by a changing world. Change currently outsources services to KPO Provider, Evalueserve. Lisa Wade and Nicki Ashton, Executive Directors and Portfolio Managers at Change explain this relationship and the exciting possibilities that lie ahead in Sustainable investment...

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SSON: Can you start by giving us an overview of your organization - ‘Change Investment Management’?

Nicki: Change Investment Management is about trying to do something a little bit different in finance. We market ourselves as the new age of investment management. 

Our business model is unusual, Lisa and I both look after the portfolio management. We’ve built a team of service providers and an advisory panel of industry experts to strengthen our resourcing on the investment level with people like Evalueserve and organizations like TruCost, who look after our environmental analysis. 

We are a small organization, but in terms of resources, when we market ourselves we have a team of people which we see as a much more sustainable business model in this sort of fund.  The fund itself is a thematic fund, we invest in what we see as the industry rising to the challenges of a changing world; broadly speaking, that’s renewable energy, water, waste, food and agriculture.  Our advisory panel is formed of an expert in each of the fields or sectors that we invest in, who works hands on in that industry and is able to give us an information advantage within the industry in which they operate. 

SSON: Can you tell us about the work you are currently doing with Evalueserve?

Nicki: We utilizes them to build out our individual models on the companies that we hold in our portfolio.  We have a portfolio of around 30 stocks.  Evalueserve has helped us to build out, 50 or 60 models within the industries in which we invest.  . 

SSON : What led you to seek external support in this area?

Lisa: Basically we had previous experience in funds management and we looked to outsourcing from a resources point of view.  We can have access to a larger team with a small number of people actually in our office.  We also believe it’s a more sustainable way of running a team, so we do it from an environmental perspective as well. 

SSON: What are some of the reservations that you may hear from investors vis-a-vis the decision to work with partners like Evalueserve?

Lisa: I don’t think we’ve really come up against any because we explain it as such that it gives us the opportunity to focus on the portfolio management. But as we are a small team, one of the criticisms we have had in the past is in terms of resourcing. So having Evalueserve to do the service which they provide gives people actually a level of comfort that we’re not spreading ourselves too thin by trying to do it all, or that we have actually taken a smart approach to this and sought out some strategic partners, as we like to describe them, to assist in our qualitative research.

Nicki: When we were first looking at companies to outsource to, we spoke to a lot of people, and I think, the general concerns when using outsource resources are delivery and communication. But we’ve found with Evalueserve there’s never been a delay in delivery, they have excellent communication, and it’s just like they’re part of our team.

SSON: You’ve been operating for a year now, how long did the transition period of services to Evalueserve take to complete?

Nicki: When we set up Change Investment Management we initiated discussions with Evalueserve pretty much from the beginning. We recognized that we would outsource some of tasks to get the fund up and running and this  was going to be an important part of our business model,.  So there wasn’t really a transition period, it was just sort of from day one; from the time of the first meeting we had with Evalueserve to actually signing and getting them started on our model building was very short.

SSON: If another organization is reading this article and currently thinking about outsourcing their knowledge, what advice would you give to them and to avoid any pitfalls that may come along the way?

Lisa: In my experience, I think, that the concerns and fears people have center around communication and intellectual property.  Evalueserve trade up as though they are part of our team members and organization. 

Nicki: I guess, in terms of transition, it probably took us a month to fine tune the models to what we needed and what we wanted.  We started with a very basic template and we sort of built it up from there.  We’ve been using them now for almost a year and we’re still developing different things within the model.  So it’s an evolving process, I would say there is a couple of weeks transition period while you get the right product that suits your needs.

SSON: Sustainable growth is obviously becoming a well coined phrase, but how can this be achieved through effective knowledge process outsourcing?

Lisa: Basically it’s a matter of efficient resourcing.  We invest in, by definition, sustainable companies so we have tried to design our business to be a sustainable business that we would like to invest in.  Having outsourcing key personnel and having people in other countries is very efficient for us; it means that we basically reduce our own carbon footprint by having less paper within our organization with less resourcing requirements, and less business travel and things like that.

SSON: As experienced traders, have you witnessed a huge growth or surge in KPO, and what are the key steps to getting it right?

Lisa: I have seen more and more  investment banks using this type of product.  I think the key thing is to continue your own branding within your models and to maintain ownership and control of the output.  But at the same time it helps to use a reputable and stable organization such as Evalueserve, then they can actually be part of your organization as well. 

I think the institutions in general are starting to accept the fact that it’s much more efficient for small organizations to use resources such as this. And as long as the work and the information is being done, I think, they’re accepting that it’s a far more efficient way of running a small boutique fund.

SSON: So what’s next, are there any other services that you’re hoping to centralize?

Lisa: Well, within our suite of products that we offer,  we’re looking to Evalueserve to help with our pitch documents and the actual marketing materials. 

Nicki: At the moment Evalueserve has just assisted on the financial modeling. We are  looking at having them work with us on our pitch documents and also on our thematic document which we generate internally; so there are lots of other opportunities. We also have a quantitative model which we run over our own investment universe, which Lisa has built, and we have started exploring the opportunities to get Evalueserve to assist us on some of that as well.

SSON: How has Evalueserve assisted in saving you time and money?

Lisa: For us, it’s dramatic; we would be spending all our time on models and we wouldn’t be able to focus on the portfolio. Now we can focus on the portfolio management and day to day running of the portfolio as opposed to the minutiae of every single line by line number in the model. 

Nicki: It also gives us the opportunity to do our detailed qualitative research on each of our investment holdings, maintains contact with company management and ensures that our day is better utilized than filling in numbers.

SSON:  Where would you like to see yourselves and your company within the next five years?

Lisa: In five years time we see ourselves as leading, not only Australian, but global funds management businesses.  We are a sustainable business investing in sustainable companies, and what we really are trying to achieve is to be best in class in sustainable investing.

SSON: Well, I wish you both the very best of luck

SSON News and Analysis
Posted: 07/09/2012


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