Wednesday, 20 February 2008

Unions and housing investment

One of the things you can do if you get some degree of control over your own capital is to set some principles about how it should be used. In North America the unions sussed this out years ago, and have been developing policies and, perhaps more importantly, investment products ever since.

One of the long-standing examples of union innovation in the investment world is the AFL-CIO Housing Investment Trust. It attempts to both provide a steady, bond-like return to investors, whilst at the same time supporting the growth in affordable housing and creating jobs where unions are recognised. Here's some of the blurb:

"The HIT supports the values of the union movement through the housing it finances and the good jobs it creates. Although financial performance is its first priority, participants in the HIT have the satisfaction of knowing that their investments also create other positive, tangible benefits for working people and their communities. The HIT has financed close to 500 housing projects, creating or preserving more than 80,000 homes. That financing has generated employment for an estimated 50,000 union construction workers who have labored in the development of these projects."

In essence it's a simple idea, and there are comparable stories from Canada, but there is nothing even remotely similar in the UK. At the moment the only thing I can think of is TU Fund Managers, but it only offers straightforward equity and bond unit trusts, nothing on the property side. The day-today fund management is outsourced to Insight Investment (who are good on SRI, though their voting is a bit questionable).

Given the never-ending expansion in the types of products flogged to trustees by fund managers and others, isn't a bit surprising that no-one has ever thought about developing some TU-friendly options? There are already sustainable property investment options, why not sustainable and pro-union?

And again the Personal Accounts scheme looms large. The default fund will no doubt want to invest in a wide range of assets, and will also want to be seen to be acting responsibly. Something akin the HIT might provide an interesting opportunity. But it means that unions need to get their thinking caps on now.

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