Ethical Bond Funds
Ethical Bond Funds
For investors who want to know that their money is being invested in line with their principles ethical funds provide a range of solutions. With interest rates at record lows at the time of writing income seeking investors who wish to avoid equities but want a better return offered by cash may want to consider the merits of ethical bond funds. Bond funds offer the potential for higher income than from cash on deposit although you need to be comfortable with the associated investment risk.
Investing in a ethical bond fund offers investors:
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Option of Regular Income - Many funds offer either monthly or quarterly income options. If you invest in an ISA, income can be distributed to you tax free or if you prefer some funds allow you to accumultate the income within the fund by buying more units to provide capital growth.
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Ethical Screening Policy - The fund manager will select company bonds in line with the fund objective.
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Diversification - a typical corporate bond fund will invest in 40 institutions or more reducing the risk to investors in the event of a default of a bond issuer.
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Potential for capital growth - providing a lower risk than equity investment.
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Fund manager expertise - Our select fund range of corporate bond funds have been assessed by an independent research company Morningstar OBSR.
Fund Manager | Fund | Fund Manager Initial Charge¹ | AMC³ | Income Yield* | Select Fund° | Fact Sheet | How to Invest |
---|---|---|---|---|---|---|---|
Kames Ethical Corporate Bond | 0% | 0.50% | 4.08% | Factsheet | Apply Now > | ||
Income Paid Quarterly. The primary investment objective is to maximise total return (income plus capital) by investing in sterling denominated bonds issued by a company or organisation which meets the funds predefined ethical criteria. See latest fund factsheet for details. |
³AMC is the Annual Management Charge applied by the Fund Manager.
°Select Fund - See how our funds are selected
Bonds: To provide the potential for overall returns these funds invest in bonds, also known as fixed interest securities. This is achieved by receiving regular interest on loans to companies or governments. There is a chance the bond issuer could fall into financial difficulty and will not be able to pay the interest or the loan back, which could result in a fall in your investment returns. Bonds can also be sensitive to trends in interest rate movements and if interest rates go up, the returns on your investment are likely to fall as bonds can become less attractive. On the other hand, if interest rates fall, bonds are likely to become more attractive and your investment returns increase.
See below for popular ethical bond funds that are not on our select panel.
Fund Manager | Fund | Fund Manager Initial Charge¹ | AMC³ | Income Yield* | Fact Sheet | How to Invest |
---|---|---|---|---|---|---|
Ecclesiastical Amity Sterling Bond | 0% | 0.65% | 5.4% | Factsheet | Apply Now > | |
Income Paid Quarterly.The Fund aims to achieve attractive income from investing in UK Government and good quality sterling fixed interest securities including UK government bonds, corporate bonds, preference shares, convertibles and other loan stock issued by companies which make a positive contribution to society and the environment through sustainable and socially responsible practices. The Fund seeks to avoid investment in certain areas such as companies which have a material involvement in alcohol, tobacco and weapon production, gambling and publication of violent or explicit materials. See latest fund factsheet for details. | ||||||
F&C; Ethical Bond | 0% | 0.50% | 3.6% | Factsheet | Apply Now > | |
Income Paid Twice Yearly. The Fund aims to maximise returns through investment primarily in fixed interest securities of an ethically screened and diversified list of companies. The Fund may also invest in warrants, collective investment schemes, money market instruments and derivatives. The Fund will invest in investment grade and high yield securities. Government securities are excluded. Non-sterling denominated issues are permitted and any currency exposure will normally be hedged back to sterling. To manage risk the Fund will aim to achieve a wide degree of diversification across the available issuers and the manager will adopt a rigorous credit management process. Derivatives may be used to increase, reduce and maintain the investment exposure of the Fund including use of single name CDS and interest rate swaps in addition to EPM. See latest fund factsheet for details. |
*Current Income Yields are Gross, Variable and Not Guaranteed as at 25/02/13 - See Fund Factsheet for details.
³AMC is the Annual Management Charge applied by the Fund Manager.
Bonds: To provide the potential for overall returns these funds invest in bonds, also known as fixed interest securities. This is achieved by receiving regular interest on loans to companies or governments. There is a chance the bond issuer could fall into financial difficulty and will not be able to pay the interest or the loan back, which could result in a fall in your investment returns. Bonds can also be sensitive to trends in interest rate movements and if interest rates go up, the returns on your investment are likely to fall as bonds can become less attractive. On the other hand, if interest rates fall, bonds are likely to become more attractive and your investment returns increase.
By investing in a ethical bond fund, you are investing in the bonds of a number of companies (potentially 50 company or organisation bonds or more). The fund managers of a ethical bond fund will either buy bonds when they are first issued or on the secondary market. Bonds could be held until redemption or resold on the second hand market. However, whilst they are held within the fund, you will be entitled to receive the interest.
Important Risk Information:
This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
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