Claudia Kwan, managing partner of NorthStar Impact Funds, is achieving significant market outperformance with an impact-focused investment strategy. Her fund has beaten the market by over 20 per cent in the past year, deliberately avoiding traditional ASX mainstays like major banks. NorthStar Impact Funds is an investment management firm focusing on companies with measurable positive societal and environmental impact. This approach scrutinises a company’s core activities and contribution to “net good,” distinguishing it from broader ESG funds.
Kwan’s philosophy, shared with founder Kerry Series, rigorously assesses what a company does. This leads to automatic exclusions for sectors like major banks, due to fossil fuel funding, and businesses in coal or oil. Conversely, resources like copper, essential for electric vehicles, are eligible. “I only invest in companies that have an articulated and measurable impact on society and the environment,” Kwan states, ruling out areas like energy-intensive data centres and gold.
The $35 million fund’s unique strategy has delivered robust financial results. In the past 12 months, NorthStar returned 14.25 per cent, outperforming the All Ordinaries by 12.72 per cent and the S&P/ASX Small Ordinaries Industrials TR Index by 22.87 per cent. Kwan attributes this success largely to early investment in the electrification theme. Key performers include engineering firm Tasmea (up 130 per cent) and electrical contractor Southern Cross Electrical (surging 125 per cent).
NorthStar’s strict impact mandate ensures alignment with its core purpose, sometimes foregoing potential gains. Kwan cited the sale of GenusPlus, despite strong share performance, due to its increased involvement in the gas sector. AI-focused companies are also approached cautiously. “If this company didn’t exist, would the world be a better or worse place? A company that’s doing electrification and trying to decarbonise, that’s unequivocally a yes,” Kwan affirms. This commitment is central to NorthStar’s distinctive investment approach.
