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February 28, 2007
New Ethical Fund Brings Value-Based Investing to High Street
    by Anne Moore Odell

Marks & Spencer Money, a former division of the top English retailer Marks & Spencer, has started offering a new SRI fund called the M & S Ethical Fund, which will be managed by two well-respected SRI mangers.

Looking to meet the demands of English investors interested in socially responsible investing, Marks & Spencer Money launched its new Ethical Fund at the beginning of February. This marks a huge leap into the mainstream for the SRI investing movement.

"M & S has seen a increase in demand for socially responsible products, whether green or ethical," said James Thorpe, PR Manager for Marks & Spencer Money. "A green/ethical fund was missing from M & S Money's portfolio of unit trusts, so it was a natural step to launch one."

Marks & Spencer Money started originally in 1985 as a credit card service for the shopping giant Mark & Spencer, a retailer of clothing, food, and household goods. However, it now offers many banking and investment services and products from its branches, many of which are housed in Marks & Spencer stores, making for one-stop shopping for both retail goods and financial services.

"With the launch of the M & S Ethical Fund, we are seeing a SRI product available from the shops of a high street retailer across the UK, associated with a highly trusted brand and advertised in the center-right press as well as the center-left press," Penny Shepherd, Chief Executive of the UK Social Investment Forum (UKSIF) told

Shepherd added, "Advertising in center-right papers such as The Sunday Telegraph now is a smart move. The Telegraph papers’ regular coverage of green issues reflects the way concern about climate change and quality of life is now a mainstream issue in the UK and their older and richer readership profile has long made them attractive for general personal finance advertising."

In 2004, Marks & Spencer Money was sold toHSBC, one of the world’s largest banking and financial services organizations. HSBC is the first bank to become carbon neutral and invests in carbon neutral projects on Marks & Spencer Money’s behalf.

HSBC Investments was charged with overseeing the new Ethical Fund portfolio. HSBC Investment chose two asset managers to invest the portfolio’s funds:Sinopia Asset Management, which is part of the HSBC group andJupiter Asset Management. Sinopia works with a balanced account while Jupiter uses an active fund management to chose its stocks from a pre-approved list of companies.

"The combination of the fund managers means that risk is spread more diversely with the aim of improved investment performance," Thorpe stated.

Both asset managers employ ethical research strategies to make sure that all the portfolio’s stocks meet M & S’s investment criteria. These criteria include avoiding companies that have a poor environmental record, conduct nonessential animal testing, and use child labor. Managers will also avoid companies whose primary activities involve armaments, the fur trade, gambling, pornography or tobacco.

Sinopia is HSBC's quantitative fund management business. They will work in conjunction with the research consultant Innovest, who specializes in analyzing and rating companies on social responsibility issues. Companies that pass M & S’s ethical scoring levels are passed to Sinopia, who in turn, will use their quantitative processes to establish which companies offer the best value. Innovest sets three criteria for choosing stocks. These three grades are Best in Class, the UN Global Compact, and negative screening.

Jupiter has 18 years of experience in the socially responsible investment sector and is one of the UK's market leading fund managers. Jupiter invests in two types of companies. The first type of company offers solutions to environmental and social problems, which Jupiter judges using positive criteria in six environmental areas: clean energy, green transport, environmental services, sustainable living, waste management, and water management. The second type of company actively manages its social and environmental impacts.

"M&S Money comes into this movement following the interests of the consumers as they look to purchase ethical products," said Emma Howard Boyd, Director of Jupiter. Howard Boyd has worked in the SRI field for twelve years and seen the strong performances of environmental funds. "The old arguments against SRI funds not being profitable don’t hold up," she added.

The M & S Ethical Fund can be sheltered in a tax-exempt ISA wrapper which allows English investors to put up to €7,000 into a tax-free account. The Ethical Fund will charge an annual management fee of 1.5%, which is standard for managed funds. For people who buy into the Fund by May 5, 2007 the initial charge will be waved. After that date the initial charge will become 1%. Because the initial minimum investment of €100 and €25 for regular payments is relatively low, the Ethical Fund lets everyone interested in investing in SRI take part. The Fund will also be available from independent financial advisors (IFAs).

Marks & Spencer Money also works to walk its own talk. All of Marks & Spencer Money's electricity is from renewable sources—73% from bio-mass and organic waste (which has a lower rate of CO2 than fossil fuels) and 27% from zero emission sources (hydro, solar and wind power). Besides using all recycled paper for its marketing materials, 63% of its waste is recycled, including paper, IT equipment, toners, garden waste, aluminum cans and cardboard. The company also organizes car sharing and a staff bus.


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