ASIF Group Principles of National Interest Investing (NII)
Recent Australian government announcements surrounding the federal budget have described a strategy for promoting various aspects of ‘sovereign capability’ while addressing supply chain resilience, cyber security, and other issues of national concern. The implicit theme of public investment policy is the national interest, a poorly defined but still meaningful concept. Current policies encourage public-private co-investment in favoured projects, but a national interest investing concept can take this principle much further. Private funds can be enlisted to make complementary investments not just in specific projects, but in national systems.
Along with passive management, the broad theme of ‘ethical investing’ has been one of the great investment trends of the past two decades. There are many variations, but the essential element is investor assurance. People like to know that their money is going to a good cause, or at least not a bad one. If the passive investor can be agnostic at little or no cost the ethical investor can afford to be altruistic. The national interest is notoriously subjective, but no more so than religion or the environment, and an investment theme only requires a limited set of agreed objectives.
National interest value can only be assessed from a systems perspective. This level of analysis would not normally be of much interest to an individual investor, but an investment theme or category can take a more holistic approach. One consequence of this systems perspective is that national interest investing is more a strategy than a constraint. Businesses do not exist in isolation, but within a greater context of infrastructure, suppliers, and even the collective effects created by competitors. Just as a business can be described as an economic system, a larger system can be viewed as a business, and this is the real target of national interest investment.