As interest in socially responsible investment continues to grow, two new products linked to ethical indices are being marketed. Mellon Global Investments is launching the Mellon European Ethical Index Tracker, linked to Europe’s first ethical index.
The fund tracks the E Capital Ethical Index Euro, which was lauched in May 2000 by independent financial adviser E Capital Partners. The index includes 150 stocks from a universe of European stocks listed on recognised exchanges across Europe, representing about two thirds of total European market capitalisation.
The screening methodology was designed by a joint venture between the Vatican University and Italian business school Universita Bocconi. Mellon says it has already seen considerable interest among Catholic institutions for the new fund.
Each stock in the index must satisfy both negative screening, such as involvement in tobacco, alcohol, gambling, pornography, military or nuclear-related activities, and positive screening, including an assessment of social, environmental and general – strategy/governance – criteria. Stock selection is then ratified by an independent committee, says Mellon, comprising senior representatives of the Silesian, Capuchin and Jesuit orders.
“Since we set up the Catholic Healthcare Investment Trust back in 1998, there has been increasing interest in socially responsible investment, both actively managed and index tracker funds,” said Thomas Durante, vice president of Mellon Equity and fund manager of the Mellon Ethical European Index Tracker. The fund is available in the UK, and will be available to European investors soon, says Mellon.
Meanwhile, the Co-operative Bank has launched what it says is the first deposit bond to offer the opportunity of investing in the most socially responsible of the UK’s leading companies without the risk of capital losses.
Investors can put between £3,000 and £500,000 into the Co-operative Bank Guaranteed Stockmarket Bond for five years. When the bond matures in March 2007, the return will reflect total percentage growth of the FTSE4Good UK 50 Index, up to a limit of 66%. To protect investors against fluctuations around the time of maturity, the return will be based on the average over the final year.
The FTSE4Good UK 50 Index was established at the end of July 2001 as a tradeable index containing leading companies from the FTSE All-Share Index, chosen on the basis of their good record on corporate social responsibility. Selection criteria cover environmental sustainability, universal human rights and positive relationships with stakeholders.
The bond is operated by the bank’s Guernsey branch, and on maturity, interest will be paid to investors without deduction of income tax.
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