While Westpac and the Commonwealth Bank have backed Social Benefit Bonds (SBBs), NAB and Christian Super have reservations about the financial instruments.
NAB Private Wealth investment strategist Nick Ryder said "it is too soon to see what the returns have been" for the bank to comment on the bonds.
Christian Super chief executive Peter Murphy said the fund had studied SBBs but was concerned at their complexity. "Overall, they're a great idea," he said, "but this is too complex for us as a super fund."
The New South Wales government announced in March this year that the Benevolent Society would develop a $10 million SBB aimed at reducing the time that children from 550 families spend in foster care.
UnitingCare Burnside was also working on a $10 million SBB focussed on helping children up to five years of age, and their parents, achieve reduced foster care rates over seven years.
Westpac Corp and the Commonwealth Bank were backing these bonds.
Ryder said SBBs could be used for social programs where outcomes were measurable and there were significant cost savings to the taxpayer, for example school truancy, preventive health measures, or public accommodation for the homeless.
"SBBs also benefit wealthy investors by creating a class of assets similar to micro-finance and other philanthro-capitalism pursuits which did not necessarily require people to choose between being a philanthropist or an investor," Ryder said.
"SBBs also potentially create investments where returns from the asset class are not linked to interest rates and equity markets, and they allow private sector investors to step in to provide funding for programs which may have otherwise been funded by governments or charitable organisations.
SBBs are part of a range of new initiatives that governments are experimenting with to bring in private sector capital to fund assets and social programs that benefit the public (for example public to private infrastructure projects)," Ryder said.
Murphy's concern - in addition to the complexity - was that the fund was "cautious about using Social Return On Investment figures".
"While these may be good in an absolute sense, in a relative sense they may lead to conclusions that are not necessarily there."
"These bonds are very complex. For Christian Super to justify investing in them, we would need to put in a lot of work to understand them and we don't invest in anything we don't understand."
"You need to fully comprehend the metrics, and we want to encourage them, but we want to encourage good risk-adjusted returns. Are they high risk? We can't say."
