Co-operative Bank has introduced a guaranteed offshore bond that tracks the FTSE4Good UK 50 index for five years.
The FTSE 4Good UK 50 index is one of a series of socially responsible indices established by FTSE in July 2001. It contains 50 of the largest socially responsible companies in the UK, which are also listed on the FTSE All Share index. This includes companies such as Marks & Spencer, Boots, Abbey National and BT Group.
The companies listed on the index are not involved in excluded industries, such as tobacco production and weapons manufacturing. They are screened according to socially responsible criteria which considers factors such as environmental policies, business ethics, equal opportunities, staff training and health & safety. Investors in the Co-operative bond get 100 per cent of their original capital at the end of the five-year term, whatever happens to the index. However, the return is capped at 66 per cent of the average growth of the index during the final year.
The fund is likely to suit investors with a socially responsible attitude who are looking for offshore tax advantages. The security of a full capital guarantee may also be attractive providing they are willing to give up some of the potential growth.
Co-operative Bank is not the first company to track an index from the FTSE4Good series. Close Fund Management established an Oeic last year that tracks the FTSE 4Good UK index, the top 100 socially responsible companies. However, the Close product does not offer a capital guarantee, so growth is not limited as it is with the Co-Operative Bank product.