Ethical Performance
inside intelligence for responsible business


four institutions launch new ethical funds

May 1999

Some of the UK’s best known financial service providers are poised to launch new ethical funds later this year.

Three new funds – from Legal General, Norwich Union and Murray Johnstone – are being launched by institutions with little previous experience of ethical investment, and will bring the number of ethical funds in the UK to 44.

Legal & General’s first ethical fund is expected to be launched in the third quarter of this year. ‘It will initially be a unit trust, with the intention of making it available as a pension fund later on,’ confirmed L&G’s senior fund manager, Andy Banks. ‘That means it will be marketed to individuals and corporate customers.’

Norwich Union’s first foray into the ethical market will be a pension fund later this year. ‘We’ve had an inhouse team looking at it for some time,’ said a spokesman. ‘Obviously it’s an expanding market and we are interested, but we don’t want to say any more at this stage,’ he added.

Murray Johnstone is launching its ethical fund ‘aimed predominantly at the retail market’ in May or June.

These three new ventures by leading institutions into the ethical fund market follow the launch by Scottish Amicable of an ethical unit trust on April 6. The Scottish Amicable Ethical Fund is being set up and managed by PPM, its inhouse fund management unit, with research provided by the Ethical Investment Research Service.

A fifth financial services provider, Scottish Widows, is also believed to be considering an ethical fund, but was reluctant to discuss its plans. Scottish Widow’s pensions strategy manager Ian Naismith said, ‘certainly it is becoming more of an issue in the market and it’s something that has to be actively looked at. We’re in the process of reviewing the situation.’

Firms entering the market for the first time were likely to use a new fund as a sounding board for the future, according to Keith Middleton of AXA Sun Life, which launched its first ethical investment vehicle a year ago. The AXA Sun Life OIEC has attracted £3.4 million since its launch, but £2.9m of that is internal life and pensions money.

Members of the BBC’s pension scheme have been given the chance to invest some of their additional voluntary contributions in an ethical fund.

The AVC option, which uses positive and negative social, ethical and environmental criteria to select investments, will be managed by Friends Ivory & Sime.

Peter Hunter, a member-nominated trustee, said the change was a response to staff pressure. ‘The trustees believe the new fund will be welcomed by members who want to invest in a way that reflects their social concerns,’ he said.

The BBC Pension Trust has been resisting members’ calls to adopt an ethical investment policy on the grounds that its trustees must put financial interests first. But trustees recently stated they ‘recognise the weight of concern expressed by some members and have advised all the fund managers of their desire not to encourage unethical behaviour through the scheme’s investments.’


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