Standard Life Fund Management is launching a UK ethical fund, claiming its charges will undercut rival unit trusts.
The move is the first in a series of ethical fund launches from Standard Life planned this year. Other launches will include ethical life and pension funds.
The initial charge on the unit trust is 3 per cent with a bid/offer spread of 3.5 per cent. This will be discounted to 2 per cent until May 15. The annual management charge is 0.95 per cent.
This compares with charges on the Friends Provident Stewardship unit trust of 5.75 per cent initial with a bid/offer spread of 6.25 per cent and annual management charge of 1.375 per cent.
Initial commission offered by Standard is 3 per cent, with renewals of 0.25 per cent a quarter.
Standard says it can afford to slash its charges because it will spread the cost of research within the group.
The life office says the cost of external ethical research usually accounts for the higher than normal charges on rivals' funds.
Standard Life Fund Management has developed an ethical policy which will be monitored by an internal ethical committee.
The criteria contain nine negative areas which it cannot invest in. These include animal testing, alcohol and arms manufacture.
Three positive or favoured areas are the environment, employment and human life.
Minimum investment is £1,000 with additional top-up payments of £500. Minimum regular contribution is £50 a month.
SLFM chief executive Alan Burton says: "We have priced the trust at a level that leads the market for ethical investment. The fund will benefit from the same expertise that has given excellent results in our UK equity growth trust."