Mellon Global Investments has introduced the Mellon European ethical index tracker, a Ucits that tracks the E.Capital Ethical Index Euro.
The E.Capital Ethical Index Euro was established in May 2000 by independent financial advisers E. Capital Partners. It consists of 150 European stocks, mainly larger companies, that meet socially responsible criteria. There is a Catholic element to the index, as stock selection is ratified by a committee of representatives from the Silesian, Cappucin and Jesuit orders. The stocks selected for the index must not be involved in industries such as tobacco, alcohol and pornography and should show a concern for social and environmental issues in the way they operate.
The fund is unique in that it is the only ethical tracker fund with a European focus. According to Greg McCrave, principal of IFA firm Profit With Principle, the only other European ethical fund is the sustainable future fund from Norwich Union. This is actively managed by the company's investment arm, Morely Fund Management.
The advantage of the fund is that it gives ethical investors the chance to widen their portfolio beyond the UK, with possibly less volatility than an actively managed fund. However, its religious principles could make it unsuitable for some ethical investors who may, for example, feel more strongly about animal testing than pornography.
According to Standard & Poor's, Mellon Pan European equity portfolio is ranked 28 out of 297 funds based on £1,000 invested on a bid-to-bid basis with gross income reinvested over one year to February 4, 2002.