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First State extracts strong opinion



Type: Oeic

Aim: Growth by investing globally in natural resources companies

Minimum investment: Lump sum £1,000, monthly £50

Investment split: 100 per cent in natural resources companies

Isa link: Yes

Pep transfers: Yes

Charges: Initial 4%, annual 1.5%

Commission: Initial up to 4%, renewal 0.5%

Tel: 0800 917 1717

The First State global resources fund aims for growth by investing
globally in a portfolio of between 25 and 75 stocks in areas such as
gold, energy and coal.

Ethical Investors&#39 Group director Lee Coates wonders how many
people would be keen to invest in this fund if all IFAs explained to
their clients the risks associated with the fund and the human and
environmental costs involved. He says: “Perhaps IFAs will need to
cover over these problems to sell the fund to the average person.”

Coates does sees the logic in holding the fund, which has a
concentrated portfolio of stocks, as part of a diversified portfolio &#45 but
only where the client and the IFA have a positive view on extraction.

But he says: “For the ethical investor, that just is not the case for
anyone with a social conscience. From an ethical perspective, it is a
terrible idea. The human and environmental costs of extraction are
very worrying. Indigenous people can be forcibly removed and the
environment degraded, all for the benefit of the companies, with little
or no recompense for the local population.”

Coates feels the public is becoming more aware of the problems he
has outlined and says pressure groups are turning their attention to
high profile campaigns on individual companies. He adds:
“Therefore, from a risk perspective, the one issue that First State
hasn&#39t covered is that the fund is 100 per cent focused on globally
contentious practices. This must significantly increase the risk to the
entire fund, as it does not appear that First State has considered this

He concludes: “There is no mention of anything like this in the
literature, which is strange for an Australian company, considering
the ongoing problems over the Aboriginal land rights issue in

Suitability to market: Poor
Investment strategy: Poor
Charges: Average
Adviser remuneration: Average
Overall 2/10


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