Investment Profile by Pink Investments

 Rathbone Ethical Bond Fund

Rathbone Ethical Bond Fund: ISIN GB0030957020

The investment objective of the fund is to provide a regular, above average income through investing in a range of bonds and bond market instruments that meet strict criteria ethically and financially.

Investment criteria -  Exclusions
The fund shall exclude bonds issued by companies wholly or predominately involved in the following activities or whose ultimate holding company is similarly involved: 
Companies involved in the production of alcoholic beverages. 
Animal testing - Companies providing animal testing facilities, or those which use animals in the discovery or development of pharmaceutical or healthcare products; manufacturers or retailers not adopting a fixed cut-off date policy with regard to the testing of cosmetic or household products (and their ingredients) on animals. 
Manufacturers or vendors of strategic weapon systems, ordnance or combat vehicles. 
Environmentally unsustainable or high-impact activities Companies involved in mineral extraction, fossil fuel exploration and production, quarrying, agrochemical production, production of genetically modified seeds or foodstuffs; sale of hardwood products from nonsustainable sources; motor car manufacturing, or road building. Also, companies with convictions for serious or persistent pollution offences. 
Companies operating betting or gaming facilities (including casinos, betting shops and internet-based services)

Companies involved in the construction of nuclear power plants, the generation of electricity from nuclear power, or the handling or reprocessing of radioactive waste. 
Companies involved in the production or sale of pornographic material. 
Manufacturers of tobacco or tobacco products.

Positive aspects
To qualify for inclusion in the fund’s universe, companies issuing bonds should demonstrate progressive or well-developed practice or policies in one of the following key areas: 
Corporate community investment  - Companies should demonstrate long-term involvement in programmes of benefit to the community, either via cash donations or gifts in kind (e.g. staff time, use of buildings or office facilities) or membership of corporate donation benchmarking groups such as Business in the Community’s PerCent Club or the London Benchmarking Group. 
Employment -  Companies should demonstrate a commitment to workplace diversity and equal opportunities; additionally they could facilitate employee work/life balance by offering flexible working arrangements, carers’ leave and/or childcare facilities. 
Human rights  - Companies should comply with local and national standards in accordance with minimums set by the International Labour Organisation and United Nations Universal Declaration of Human Rights. Alternatively, companies may implement their own codes of conduct to ensure compliance with local laws covering child labour, working conditions and health and safety. 
Management of environmental impacts -  Companies should have a clearly defined and published policy for managing their environmental impact. This should include monitoring and reporting on progress against key performance indicators in areas such as waste disposal and recycling, consumption of resources, emissions to air, and discharges to land and water. 
Provision of beneficial products and services -  Companies should be involved in providing products or services that offer social or environmental benefits. Such activities might include designing or implementing cleaner or more efficient industrial processes; companies involved in enabling compliance with health and safety legislation; supplying educational products or services; providing waste recycling or acceptable forms of waste management (excluding energy-from-waste incineration); providing social housing; manufacturing, installing or operating renewable energy infrastructure; building or operating sustainable transport systems.

The ethical research for the fund is carried out by Rathbone Greenbank Investments, the award-winning specialist ethical investment unit of Rathbone Investment Management Limited

To meet the fund's objectives, the fund may also invest, at the Manager’s (Bryn Jones) discretion, in other transferable securities, money market instruments, warrants, cash and near cash, deposits and units in collective investment schemes. Use may be made of stocklending, borrowing, cash holdings, hedging and other investment techniques permitted by the FSA rules.

Historical distribution yield is 7.20%

10 largest holdings by  %
Clydesdale Bank 5.75% 30/03/2012  3.21
Standard Life 6.546% 01/06/2020 2.46
British Land Universal 6.75% 31/03/2020 2.41
JP Morgan 6.125% 30/05/2017 2.36
Fresh Finance FOR Residential Social Housing 11.126% 10/05/2058 2.03
Lloyds FRN 29/04/2016 2.00
Fidelity International 6.75% 19/10/2020 1.97
Legal and General 6.385% Perp 1.95
Amlin 6.5% 19/12/2026 1.85
Holmes Masters 4.009% 15/10/2054 1.84

Bryn Jones is the Fixed Income Director at Rathbones. He has over 14 years’ investment industry experience in equity and fixed income markets.

Breakdown of the fund by sector: Data as at 30.12.11

Telecommunications : 2.17%
Supranationals: 1.69%
Social Housing: 7.13%
Social Finance: 1.93%
Securitised: 4.09%
Retail: 1.97%
Renewables: 0.36%
Real Estate: 5.47%
Railways: 4.28%

Microfinance: 0.19%

Media: 1.34%

Mortgage-backed Securities: 2.55%

Insurance: 18.34%
Utilities: 0.53% Cash: 1.14%
Banks: 43.34%
Financial Services: 3.48%

For those investors wanting some regular income from a mix of ethical fixed interest investments, this fund could fit the bill.

Buy Rathbone Ethical Bond Fund: ISIN GB0030957020 up to 85p