Credit Suisse Asset Management (CSAM) is reviewing the mandate on its £100m Fellowship ethical fund ...
Credit Suisse Asset Management (CSAM) is reviewing the mandate on its £100m Fellowship ethical fund to try and improve investment returns.
The group is to look at whether the FTSE4Good index launched in June might not provide a benchmark and stock universe for the portfolio.
CSAM had also considered a unitholder survey to poll opinion on whether the investment mandate was restricting manager Suzie Kemp's ability to deliver returns. That has been cancelled for the moment.
Ian Chimes, managing director of retail at CSAM, said the index could provide the means to move away from the traditional negative criteria that limits the universe of stocks that mainstream ethical funds can invest in.
Currently, the Fellowship fund is restricted from holding companies with significant gambling or weaponry interests as well as any company engaging in activities 'considered to have an adverse overall effect on health, the environment or human dignity.'
FTSE4Good does have negative criteria, excluding tobacco producers, weapons manufacturers and businesses connected with nuclear power, however, it will allow investment in companies in polluting industries such as the oil sector, if they prove to researchers from Eiris, the ethical research consultancy, that they are actively working to clean up their activities.
This allows for the likes of BP, GlaxoSmithKline, Vodafone, HSBC, Astra Zeneca, Shell Transport & Trading, Lloyds TSB, BT, Barclays and Diagio, which at launch made up 44.46% of the FTSE4Good UK index.
The FTSE4Good Index provides a wide universe of stocks for investors, which Chimes said had the potential to benefit the fund. At launch the total investible market cap of FTSE4Good was £1,571,282m against £1,178,831m for the All-Share.
There are 283 companies in 4Good index compared to 759 in the All-Share. The yield is slightly higher at 2.407% compared to 2.425% for the All-Share.
The question is to be reviewed by the Fellowship fund's Committee of Reference, made up of five impartial experts in charity, social and ethical investment as well as third world issues.
The Fellowship fund is ranked 217 out of 283 funds in the UK All Companies sector over the year to 19 September with offer to bid losses of 32.2%. Over the three years to that date the fund is ranked 185 out of 240 funds with losses of 7.3% against a sector average gain of 2.4%.
In the Co-operative Insurance Society league of the ethical funds, Fellowship is ranked 26 out of 26 funds over the five years to 28 August. Over three years to the same date, CIS rank it 31 out of 33 funds and over one year it is ranked 24 out of 51 funds.
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