Internet bank Smile has joined forces with Co-operative Bank Financial advisers to offer Smile invest ethical, a portfolio management service that packages four ethical funds from Henderson, Gerrard, Friends Provident and Norwich Union.
Investors can choose to invest in any number of funds, depending on their requirements. The funds share a reliance on ethical screening, so companies will only be considered if they operate good social and environmental policies. Companies that profit from industries such as gambling, tobacco and pornography, will be excluded.
Henderson's ethical fund invests globally and aims to generate income and growth. A large proportion of its portfolio goes into the US and UK, in companies such as American International Group, IBM and Vodafone. The Norwich Union ethical invests only in the UK, looking for those companies with above average earnings growth. Examples of holdings include BT, Prudential and Sainsbury. The Friends Provident stewardship fund invests only in the UK and was the first fund aimed at ethical investors when it appeared in 1984, while the Gerrard ethical fund invests globally.
Investors with ethical concerns could put together their own portfolio of ethical funds. enabling them to diversify across more than the four funds that the Smile product offers. But Smile's packaged approach could appeal to those who would prefer not to make their own investment decisions.
According to Standard & Poor's, Friends Provident stewardship is second quartile Henderson ethical is third quartile based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to February 22, 2002. There is no three-year past performance for Norwich Union UK ethical and Gerrard ethical.