Rathbone Ethical Bond Fund is among the top three yielding bond funds in the Investment Management Association's (IMA) corporate bond fund sector, with an inflation busting yield in excess of 7 per cent. The fund is also among the top 25 per cent of funds in terms of total return over three years, and still does reasonably well over five.
It aims to provide an above average income via bonds that meet strict ethical and financial criteria. The fund mainly invests in bond issues over £100m that are rated between BBB and AAA, also known as investment-grade bonds and considered among the least likely to default.
The ethical research is carried out by Rathbone Greenbank Investments, but the investment process starts with fund manager Bryn Jones selecting corporate bonds that look like good investments. Rathbone Greenbank then investigates the issuers of these bonds, and if they are involved in any activities that the fund cannot invest in, they will not be considered. But companies that have well developed policies and practices in at least one of the areas the fund favours are considered, and if they are approved by at least two senior members of the Rathbone Greenbank team, the fund invests in them.
Companies that the fund does not invest in include those involved with alcohol, animal testing, armaments, environmentally unsustainable activities including mining and oil exploration, gambling, nuclear power, pornography and tobacco.
Acceptable bond issues include those with good practices in corporate community investment, employment, human rights and environmental issues.
RATHBONE ETHICAL BOND INC (GB0030957020) | |||
| PRICE: | 79.89p | SHARPE RATIO: | 0.59 |
| IMA SECTOR: | Sterling Corporate Bond | STANDARD DEVIATION: | 11.51% |
| FUND TYPE: | Unit trust | 1-YEAR PERFORMANCE: | -0.84% |
| FUND SIZE: | £73.79m | 3-YEAR ANNUALISED PERFORMANCE: | 11.07% |
| No OF HOLDINGS: | 96* | 5-YEAR ANNUALISED PERFORMANCE: | 2.16% |
| SET UP DATE: | 13 May 2002 | TOTAL EXPENSE RATIO: | 1.42%* |
| MANAGER START DATE: | 1 November 2004 | YIELD: | 7.18% |
| TURNOVER: | 221.88%* | MINIMUM INVESTMENT: | £1,000 |
| MEAN RETURN: | 8.04% | MORE DETAILS: | rutm.com |
Source: Morningstar & *Rathbones.
Performance data as at 17 October 2011
Top 10 holdings as at 30 September 2011
| Clydesdale Bank 5.75% 30/03/2012 | 3.40 |
| BL Universal 6.75% 31/03/2020 | 2.49 |
| JPMorgan 6.125% VRN 30/05/2017 | 2.48 |
| SL MACS 6.546% 1/06/2020 | 2.25 |
| Lloyds TSB FRN 29/04/2016 | 2.21 |
| Fresh Finance FOR Residential Social Housing 11.126% 10/05/2058 | 2.11 |
| Legal and General 6.385% VRN Perp | 1.98 |
| Holmes Master 4.009% 15/10/2054 | 1.95 |
| Fidelity International 6.75% 19/10/2020 | 1.92 |
| Amlin 6.5% 19/12/2016 | 1.89 |
| Sector breakdown | Percentage |
| Banks | 41.84 |
| Insurance | 17.53 |
| Social housing | 6.33 |
| Railways | 5.15 |
| Financial services | 4.55 |
| Securitised | 4.50 |
| Real estate | 3.00 |
| Other | 12.93 |
| Cash | 4.17 |
