Johannesburg - The Isibaya Fund, which took a long time to start spending the billions handed to it by the government pension fund administrator, the Public Investment Commissioners (PIC), said yesterday that it had invested R105 million in the Futuregrowth Community Property Fund.

Futuregrowth is a Cape-based asset management company that specialises in socially responsible funds. The Isibaya Fund was intended for infrastructure development and social responsibility investments, but it floundered for years. The corporatised PIC has fresh plans for responsible investing.

The Isibaya Fund said yesterday that its additional investment in Futuregrowth's property fund (it put in R45 million a few years back) was in response to President Thabo Mbeki's state of the nation address, which called for more targeted investment and suggested that 5 percent of institutional funds should target socially responsible investments.

Wayne van der Vent, the director of Futuregrowth Asset Management, said Futuregrowth always came tops in Alexander Forbes's targeted development fund category each year.

But, he said, this was because it was the only targeted development fund included in the sector. "This is an indictment on other funds and investors. The PIC has taken a laudable step by getting more involved," Van der Vent said.

Geoff Blount, the head of manager research at Investment Solutions, which hopes to launch its own array of socially responsible funds within the next month, said investors had long been wary of targeted investment, believing that risks were high and the returns not worthwhile.

Futuregrowth said its annualised returns over seven years were 11.41 percent, and Investment Solutions believed there were historically good returns to be had, along with lower volatility and risk.

Tshepo Mahloele, the head of corporate finance at the PIC, said the Isibaya Fund had made a 45 percent return in the past year after partnering more closely with Futuregrowth.

"Even jaded white male pension fund trustees can see the investment case for targeted investments," said Blount. "And I suspect targeted investments will become a prescribed asset."

He added that not only Mbeki's speech but the financial services charter, growth and development summit targets, and the development of the JSE Securities Exchange's social responsibility index had caused a mind shift in investors.

The final definition of targeted investments was still elusive. After grappling with it for more than a year, Blount said Investment Solutions had applied it to each of the three asset classes it would invest in. About property, the company took "targeted" to mean an investment that had a direct community impact, much in the same way that Futuregrowth was having a direct impact.

Futuregrowth's property fund has been running for seven years and has developed 15 shopping centres that service 7 million South Africans, or over 16 percent of the population. The shopping centres are in rural areas that have a high density of people but very little retail space.

The fund will be worth R427 million after the PIC investment. Its properties span eight provinces and directly employ 3 750 people.

Investment Solutions' balanced fund will span equities, bonds and property, and Blount said there was now a critical mass of investors interested in such funds.

He estimated that such a fund would need to start with a minimum of R100 million. Investment Solutions had not spoken to the PIC directly but did expect to use investment vehicles set up by companies such as Futuregrowth.