The Amity Sterling Bond Fund is an ethically screened fund from Ecclesiastical Investment Management Limited, which will invest in government debt and quality fixed-interest securities.

Investors are increasingly interested in issues such as climate change, fair trade and poverty, so by introducing ethical screening to its investment policy, Ecclesiastical is not only adding another filter for quality but actively giving investors a new way to enjoy profit with principles.

According to Sue Round, investment manager at Ecclesiastical: ‘With over 20 years’ experience of applying a distinctive ethical screening process on our Amity Fund, a socially responsible investment approach is not new to us. It’s an approach we have developed, refined and proven over that time.’

Minimum investment: £200
Initial charge: 5%
Annual management charge: 1.5%
Contact: For more information visit www.ecclesiastical.co.uk

James Davies says:
Ecclesiastical have extended their Socially Responsible Amity Range with the Amity Sterling Bond Fund. The fund will be jointly managed by Robin Hepworth and Chris Hiorns who are currently responsible for the Ecclesiastical Higher Income and Amity European Fund respectively.

Both managers, particularly Hepworth, have built up a decent track record. Although neither has managed a pure bond fund before, Robin Hepworth’s Higher Income Fund invests a portion of its weight into the government and corporate debt that the new Amity fund will be investing into, so there is a transferable experience – without which one would have concerns about the suitability of the management team for this type of fund.

When listening to talk of ethical and socially responsible funds, it is easy to think about ‘green’ funds and environmentally beneficial investing. The Amity range is more ‘socially conscious’ than ‘environmental’ and bases its criteria on excluding a small number of companies (typically those whose business is primarily concerned with alcohol, gambling, weapons, tobacco and the publication of violent or explicit materials); remaining companies are screened for their positive impact on the society or the environment. Investors seeking to exclude oil and gas companies, for example, should probably look elsewhere.

Bonds have had a bit of a tough time lately, but with credit spreads having widened recently, the quality end of the corporate bond sector (which the Amity Fund will invest in) could do well over the short term. The longer-term outlook for bonds is a little harder to predict, but a period of higher inflation, which we seem to be entering into, would not be favourable to the asset class.

For investors who are building their own portfolio, however, bonds should still be considered. In such circumstances it’s important to select a quality fund manager to run your bond fund. Applying ethical screening criteria often forces fund managers to look more closely at the businesses that they invest into, so I have confidence that the Amity fund managers will be able to replicate the success they’ve had managing the more equity-focused funds with this new fixed-interest mandate. The ‘socially responsible’ association of the fund may well be another draw for some investors.