Ethical Performance
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two new SRI funds will target niche markets

March 2000

Two new socially responsible investment (SRI) funds have been launched. Both are aimed at niche markets.

The Pavilion Eco Friendly Fund, launched by Pavilion Asset Management, a wholly owned subsidiary of Family Assurance Group, is a pension fund pooling vehicle available only to occupational schemes.

Christopher Edge, chief executive of Pavilion, which manages £2 billion of assets, said, ‘We are looking to provide a UK equities vehicle for occupational pension schemes who face the challenge of responding to the Pensions Act amendment.’

The CAF Ethical Plus Fund is an open ended investment company aimed at charities. It has been launched by the Charities Aid Foundation (CAF), which provides investment services for the voluntary sector and has funds totalling £820 million.

Both fund managers will assess companies using a combination of screening, preference and engagement techniques. Pavilion estimates that its assessment method will allow it to invest in 97.5 per cent of the UK stock market by sector weighting, or 75 per cent of it by value.

Pavilion analyst Philip Ayton said, ‘Mining, oil and gas and power generation sectors are screened out from absolute considerations, but get back in because they do well on management practices.’

The CAF fund, to be managed by Henderson Investors, expects not to invest in certain sectors, but is still likely to have holdings in 100 companies, with two-thirds from the FTSE All Share Index.

It will focus on ‘industries of the future’ – defined as businesses that ‘promote or benefit from sustainable economic development’, such as companies involved in healthcare, education, waste minimisation, communications technology and renewables.

Other businesses may be included, if identified as ‘best in class’ in their approach to community relations, environmental management and workplace practices.

The fund will seek to stay away from holdings in mining, chemicals, oil and car manufacturing companies. Investment in all these areas may, however, be possible if companies ‘can demonstrate an outstanding positive response’ towards social concerns.


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