The fund will initially hold three retail ethical funds from Aegon, Norwich Union and F&C, plus a segregated mandate run by JPMorgan Asset Management. Skandia designed the fund to provide a well-diversified alternative to single manager ethical funds which can be volatile. The ethical criteria will be under constant review, screening out companies involved in animal testing, alcohol, tobacco, pornography, those which harm the environment and those which have poor human rights records.
The segregated mandate, which makes up 76 per cent of the portfolio, will contain 60-70 stocks. These will be selected by fund manager Howard Williams using an ethical framework which is applied to the best ideas portfolio provided by a team of global sector analysts.
The analysts favour companies that show momentum and which have low valuations which do not reflect their real potential. The mandate aims to be more balanced than ethical portfolios which have a slant towards smaller companies and growth stocks. It will cut across both value and growth investment styles.
The Aegon ethical fund will have an 8 per cent weighting and invests in 80-100 stocks chosen by fund manager Audrey Ryan. Ryans investment style involves looking for themes and valuation. Ethical screening will be provided by the Ethical Investment Research Service.
Norwich UK ethical fund, run by Morley, takes a top-down approach to a portfolio of 40-60 stocks. Companies are rated on their ability to improve society and the fund manager will identify ethical themes which leads to favoured sectors and specific stocks categorised as winners or losers.
F&C stewardship growth fund focuses n 100-120 small to mid caps. It has a growth bias and will have a particular emphasis on IT, media and healthcare stocks.
On the plus side, this fund brings more choice into the ethical investment market and allows fund of funds and manager of manager approaches to complement each other, with Skandia retaining control over the bulk of the portfolio while still accessing existing funds which are performing well. It may be useful for advisers who are not experts in the ethical market but who have clients with ethical concerns.
However, a multi-manager ethical fund is not unique Credit Suisse Asset Management has one and Skandias darker green ethical bias may mean there are few funds to choose from if the existing fund need to be replaced.