AUSTRIA - Austrian investors are still sticking with sustainability even though some stocks in the alternative energy sector having suffered severely in the market turbulence, according to Martin Cech, manager at Austrian SRI asset manager Vinis.

"There is an unbroken interest in SRI - not only because it is considered a decoration to a portfolio," explained Cech.

"Severance pay funds and Pensionskassen have identified SRI as a possible way to optimise their portfolios over the mid- and long-term."

However, "small and mid-cap funds in the alternative themes sector, such as shares in solar or wind companies, were more under pressure" during the recent market turbulences than others.

"They did very well last year but as the current crisis is very much a crisis of faith, [investors'] belief in their continued good performance has decreased and shares in this sector have corrected by up to 50%," noted Cech.

Despite this, he said comparisons to the internet sector in 2000/2001 were wrong because the alternative energy companies "are all making a profit and are not overvalued".

Looking at the whole SRI sector, the FTSE4Good Global Index and the Dow Jones Sustainability World TR outperfomed the MSCI World Total Return by 0.1 and 0.4 percentage points respectively in March.

Cech notes investment in stocks from the alternative energy sector or similar themes is only one part of sustainable investments. The larger share is the application of sustainability criteria in established sectors like banking and telecommunication - even in turbulent times.

"Those companies which are fundamentally doing well will pay more attention to SRI than others," Cech pointed out.

"Therefore an SRI approach offers a positive selection effect. In future, SRI will be a separate investment style alongside bottom-up, fundamental or quantitative," he is convinced.

Criticism suggesting SRI would narrow the possible investment universe too much is unfounded, he argues, as all other fundmanagers also cut down the universe they aim to invest in only by using different criteria, he added.

A definite trend, according to Cech, was an "increased awareness" among investors of applying SRI criteria to their fixed-income portfolios.

"For example, they are looking at military and social spendings, corruption and labour conditions in countries whose government bonds they invest in."

Corporate bonds are seeing similar criteria to those placed on an equities portfolio, he suggested.

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