Institutional fund manager Pavilion Asset Management has designed a socially responsible investment (SRI) fund for retail investors.
Pavilion SRI is the company's first foray into the Oeic market together with Pavilion UK growth. The company was the investment arm of Family Assurance Friendly Society and was responsible for running the Family charities ethical fund, but has been an independent fund management company since 1997.
Pavilion SRI will invest in a portfolio of between 50 and 70 UK stocks. When the fund manager feels a defensive approach is appropriate, it will hold a higher number of stocks, but it will contain fewer stocks when an aggressive stance is adopted. The fund will initially try to balance the two approaches as it is expecting the economy to improve in 2002 but is unlikely to go for growth at any price.
Companies that would not usually make it into an ethical portfolio may be considered, but there are conditions attached. For example, oil and tobacco companies would not be ruled out if they could show they are actively promoting environmental issues. This may influence companies to improve their employment and social policies rather than simply excluding companies that fail to meet stringent criteria.
This fund could appeal to investors who are looking for an introduction to socially responsible investing and those who want to exert pressure on companies to become more conscious of ethical issues. But serious ethical investors may see the potential inclusion of oil and tobacco companies as compromising ethical concerns for profits and its UK bias could be too narrow for some.
According to Standard & Poor's, the Pavilion geared recovery investment trust is ranked 48 out of 61 trusts based on £1,000 invested on a mid-to-mid basis with net income reinvested over one month to December 14, 2001.