Aberdeen launches UK ethical Oeic

Aberdeen Asset Management has launched the Ethical Engagement UK Oeic. The fund, available since last week, is run by the firm’s Edinburgh-based socially responsible investment team, led by Andrew Preston.

The fund does not exclude sectors on ethical grounds and companies are assessed on a case- by-case basis. “Everything is included,” says Jamie Cumming, co-manager of the fund. “We are not using a negative screen to choose stocks. We review companies against various criteria and undertake an engagement process where there are actions we perceive to be contrary to the criteria.

“This is carried out through correspondence and face-to-face meetings with management. We are looking towards better corporate governance – the use of independent directors, for example.”

The fund holds about 50 stocks in its portfolio, with some exposure to bonds and cash. Stock selection decisions are team-based and bottom-up, with no particular market capitalisation or sector bias, says Cumming. BP, Centrica and Resolution are among the holdings, he adds.

Pension funds are expected to be among the fund’s investors. “We are initially aiming at pension funds, although that is not precluding money from other sources,” says Cumming. “But pension groups in particular are increasingly interested in SRI issues. It is something they are looking at more closely.”

The 10-strong SRI group manages assets of 300m in screened portfolios, in both open-ended and segregated accounts. The team constructs portfolios from the firm’s global equity buy list, using an extra layer of research and screening, which requires compliance under three categories: corporate governance, the environment, and labour and human labour rights.

While some companies held in the fund may not fully comply with the criteria, the team aims to enter into constructive discussions to raise standards. If a firm refuses to change its behaviour, it may be dropped from the portfolio.

The fund is run against a FTSE All-Share benchmark and initial charges are 4.25%, with annual management fees of 1.5%. Minimum investments are 500, or 50 through the monthly savings plan. The expected yield is 2% and income is payable in June and December.