Ethical leader F&C to launch new bond fund

F&C Investments is poised to execute the next stage of its strategy to further develop its sustainable investment franchise with the launch on Monday 1 October of the F&C Ethical Bond Fund.

The Fund, which will be structured as a UCITS 3 open-ended investment company and launch with in excess of £40 million of existing assets, will be available to both institutional and retail investors. It will combine F&C's heavyweight fixed interest capabilities as a manager of £50.9 billion in fixed interest assets, with a team of 47 professionals, and its market-leading position in managing ethical investment portfolios. The F&C Ethical Bond Fund will leverage the expertise of F&C's 16-strong Governance and Sustainable Investment Team to provide research on environmental, social and governance issues.

The F&C Ethical Bond Fund will operate identical ethical screening criteria to the Stewardship suite of funds, the long-established range of equity-focused ethical funds managed by F&C. The £3.5 billion Stewardship fund suite, which has around 250,000 underlying investors in a range of Friends Provident and F&C products, represents almost half of all UK ethical investors.

The Fund's universe of eligible securities will be screened on a comprehensive range of both "positive" and "negative" criteria selected by an independent policy committee. The F&C Ethical Bond Fund will actively target credits from issuers which contribute to sustainable development These includes companies providing products that are basic necessities of life such as housing and water or that help to meet sustainable development challenges like renewable energy, as well as those with good business practices in the environment and human rights. The Fund will also avoid exposure to issuers engaged in areas such as tobacco or alcohol production, gambling, pornography and the weapons industry - as well as those with poor practices towards the environment, human rights or labour relations.

The lead manager of Fund will be Rebecca Seabrook with Ian Robinson as the alternate manager. Seabrook and Robinson co-Head F&C's UK Credit team which manages in excess of £10 billion of assets, including a number of screened segregated mandates for institutional investors.

The Fund will sit in the IMA UK Corporate Bond Sector and will be benchmarked against the Sterling iBoxx non Gilts Index of UK corporate bonds. F&C estimate that in terms of market value around 59% of the iBoxx universe will be available to the Fund after the ethical screening. In addition to corporate credits, the Fund will also be able to invest in eligible supra-nationals and national development institutions that meet the ethical criteria, financial stock issued by institutions with strong track records of sustainable business practices and covered bonds from approved issuers. Government bond issues will however be excluded from the eligible universe. Should the fund invest in non-sterling credits, these will normally be hedged back into sterling.

"We believe that investors - whether individuals, charities, local authorities or pension schemes - should be able to make the same socially responsible investment decisions for their bond investments as they have been able to do for many years with their equity portfolios. F&C is ideally placed to manage this Fund given our pedigree in both corporate bonds and ethical investment," explained Rebecca Seabrook, manager of the F&C Ethical Bond Fund.

"While this Fund expects companies to meet high sustainability standards and has strict 'dark green' ethical criteria, it is important to note that in terms of investment performance we are targeting a return against a mainstream benchmark. As with our equity ethical products, we are confident that investors will be able to enjoy both strong investment performance and stand by their ethical principles," concluded Seabrook.