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Sustainable investment funds in focus: Ecclesiastical Amity UK



This week’s featured fund is the Ecclesiastical Amity UK fund.

Managed by sustainable investment pioneer Sue Round, director of group investments at Ecclesiastical, it is one of the longest established sustainable funds in the UK. The award-winning investment firm tells us more.

Tell us about what makes your fund unique

The Amity UK fund launched in 1988 and was one of the first ethical OEICs in the UK. Sue Round has managed the fund since its launch. The fund is particularly unique as it is based on a broad and deep ethical approach featuring negative and positive screens. It aims to achieve long-term capital appreciation, alongside a reasonable level of income by investing primarily in UK companies.

How do you select which companies to invest in? 

Companies are screened against both positive and negative criteria before an investment is made. The fund seeks companies that have a strong business model, are market leaders and show good management. It also selects companies with a solid financial background, including a robust business sheet, strong cash flow generation and a focus on delivering long-term sustainable returns to its shareholders. Primarily, the Amity UK fund has a bias towards mid and small-cap companies.

Are there any companies you’d pick out as star performers or particularly interesting? 

Halma, a health and safety sensor technology group, is a particularly interesting company because it scores positively across seven of Ecclesiastical Investment Management’s nine ethical screening criteria (particularly healthcare and environmental performance & management) and it has retained record profit growth through the economic cycle with return on sales averaging 16% for 25 years+.

Oxford Instruments, a producer of instrumentation equipment used in scientific research, chemical analysis, semi-conductor processing and diagnostic imaging is also a star performer. As is Porvair, a specialist filtration and environmental technology group. These three firms are good examples of companies where the ethical positives and the investment proposition go hand-in-hand.

Why would the fund be attractive to sustainable investors? 

The Amity UK fund is a retail investment fund with a difference. Not only does it seek to deliver profit over the medium to long-term, but it does so with principles by investing in socially responsible enterprises. This is the Ecclesiastical Investment Management ‘profit with principles’ approach. In particular, it looks to avoid investment in certain areas, such as companies which have material involvement in alcohol, tobacco and weapon production, gambling and publication of violent of explicit materials, which can be a key consideration for the sustainable investor.

The robust investment process is backed up by an award-winning socially responsible investment team, including fund manager Sue Round, who has been recognised by Trustnet as one of its Alpha Fund Managers 2014 and is AAA* rated by Citywire (as of 31/01/14). The fund was one of the UK’s first socially responsible investment (SRI) retail funds and has been managed by Sue for 26 years since it was launched in 1988. It is now an established SRI Fund.

How would you respond to claims that sustainable investment funds underperform?

Performance and sustainability are not mutually exclusive. In fact, sustainable funds have won numerous awards against so called mainstream funds. Additionally, research by in August 2013 found that ethical funds posted average gains of 36% over three years, compared with 31% growth from the average non-ethical fund. This demonstrates that it is possible to have a sustainable framework and achieve strong performance simultaneously. Ecclesiastical Investment Management believes that companies which manage financial and non-financial risk holistically will be better long-term performers.

From a personal perspective, why should people consider sustainable investment more generally?

More than 100 UK ethical and responsible products now provide a rich diversity of investment for the retail client. Investing with a profits for principles approach is becoming a mainstream choice for many investors and the choice of products has never been broader. A survey by YouGov in 2012 found that 45% of UK adults with investments said that they now want at least some of their investments to take green and ethical considerations into account.

Furthermore, Ecclesiastical Investment Management believes that stock selection based upon financial and non-financial drivers will drive better risk management and better performance over time. There is no intrinsic reason why performance needs to be sacrificed in order to invest responsibly.

Key facts

Type: OEIC
Fund size: £123.2m as of February 28 2014
Launch date: March 1 1988

An online summary of the fund can be found here. 

Further reading:

Ecclesiastical, Aberdeen and Kames top fund choices for specialist ethical financial advisers

Friends Provident, Ecclesiastical and Aberdeen top ethical choices for advisers

Sustainable company of the week: Halma

2013 sustainable fund manager of the year: Ecclesiastical Investment Management

Ecclesiastical scoops ethical investment gong for fifth consecutive year


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