The company launched its UK equity fund as one of the first retail ethical funds 20 years ago and the new fund is the fourth in its socially responsible Amity range.
Amity sterling bond fund provides regular quarterly income by investing in a portfolio of investment-grade fixed interest securities including UK Government bonds, corporate bonds, preference shares and convertibles. The portfolio is subject to an ethical screening process, which accentuates the positives while avoiding negative industries and practices.
The fund is co-managed by Robin Hepworth and Chris Hiorns. Hepworth joined Ecclesiastical in 1988. He also manages the Amity international fund and the Ecclesiastical higher income fund, which is not ethically screened. Hiorns joined Ecclesiastical in 1996, initially as an analyst. He was promoted to associate fund manager in 2006.
When selecting investment-grade bonds for this fund, the screening process weighs up the business’s positive attributes against its overall impact on society and the environment. In-house socially responsible investment analysts, who carry out thematic and stock specific research, will help the fund managers.
Hepworth and Hiorns will look for companies with sound financials, good management, growth prospects and the potential to generate strong cash flow. They will focus on companies with a track record and good performance in business practices, community relations, corporate governance, human rights, labour relations and urban regeneration.
Some companies are rejected through negative screening, allowing the fund to avoid firms involved in alcohol production, gambling, pornography, animal testing, intensive farming, supporting oppressive regimes and the production of weapons.
In practice, the fund is likely to focus on companies that are providing the necessities of life such as water, shelter, health, education and products that have been produced using ethical trading initiatives and sustainable business models. Other opportunities are likely to come from firms working on climate change issues and fair trade.
Some investors may be pleased that they can access Ecclesiastical’s ethical pedigree through a bond fund, but this fund may face competition from established products from Rathbones, F&C and Royal London.