Scottish Equitable Asset Management (SEAM) is aiming to launch a comprehensive range of specialist e...
Scottish Equitable Asset Management (SEAM) is aiming to launch a comprehensive range of specialist ethical funds over the next 12 months.
Last week, it launched the UK's first fund to invest exclusively in socially responsible corporate bonds. The UK Socially Responsible Income Fund, a subfund of Scottish Equitable's Oeic, aims to offer socially-aware investors the opportunity to earn a high income from their investments.
Eddie Reynolds, product manager, said SEAM would look to launch further socially responsible products, providing the ethical bond fund proved successful. The most obvious specialist ethical fund to launch next would be Europe, probably by the end of 2000, followed by the US.
Reynolds said: "Up until now there has been no diversification in the range of ethical funds offered to UK investors. Most invest primarily in the UK, while there are a few with global investment mandates.
"Similarly, of the 30 or so funds currently offered, all are invested in equities and are therefore naturally geared toward growth, rather than income."
SEAM already runs some £150m in socially responsible mandates. These include the Ethical and UK Socially Responsible Equity Oeic funds, both managed by John Smelt.
The bond fund will be managed by Calum Smith, a member of Scottish Equitable's UK fixed interest team and has a yield of 6.6%. The team also runs the UK Extra Income Oeic fund.
Smith said at least 80% of the fund will be invested in investment grade bonds, those rated as BBB or above. All holdings will be sterling denominated, although a small portion will be internationally based. There are currently 34 holdings, which is unlikely to increase substantially. The top 10 holdings make up about 40% of the portfolio.
Holdings at launch included paper from Tesco, Asda, Bank America, the Daily Mail and Hammerson.
Research is carried out by the company's Socially Responsible Investment (SRI) research team. Both positive and negative factors are used to evaluate companies that are aligned with greater social responsibility.
Charles Henderson, SRI research manager at SEAM, said: "By using both positive and negative selection criteria we can more effectively identify those companies that act with greater social responsibility. Within this fund the positive criteria will have the greatest impact. Investors, however, can be assured that certain activities, such as tobacco production or arms manufacturing, will still be excluded."
The initial charge on the fund is 5.5% with an annual management charge of 1%. Minimum lump sum investment is £500 and the minimum monthly savings plan is £50.
The fund is available as an Isa. IFA commission is 3% initial. Renewal commission is negotiable.
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