Rathbone Unit Trust Management has capitalised on interest in corporate bonds and ethical products with the introduction of the Rathbone ethical bond fund.
This unit trust invests in corporate bonds issued by companies that have a positive attitude towards ethical concerns. It has a target yield of 6.2 per cent and will concentrate only on sterling-denominated bonds rated at BBB and above.
The fund will be managed by Luke Hickmore, who has worked within Rathbones' ethical investment team for eight years on the fixed-interest side. He will be assisted by Julian Chillingworth, who joined Rathbones in 2001 from Investec and currently runs the Rathbone Esk and Rathbone technologies fund.
Bonds issued by companies in industries such as animal testing, nuclear power and gambling are excluded. Instead, the focus will be on companies that have well-developed practices in areas such as human rights, employment and the provision of beneficial goods and services.
The fund could suit investors with ethical concerns looking for income. Aegon's ethical income fund and Morley Fund Management's sustainable futures corporate bond fund could be seen as competitors, but these ethical bond funds invest in high-yield corporate bonds and this increases the risks. However, it may be difficult for Rathbones' fund to reach its target yield as it excludes high-yield bonds from its portfolio.
According to Standard & Poor's the Rathbone Esk fund is ranked 92 out of 137 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to April 28, 2002.