Courtiers boots F&C and LGIM funds from ethical strategy

Added 8th November 2016

Courtiers has sold its holdings in two F&C ethical funds and an LGIM ethical trust over concerns about the strictness of their screening processes.

Courtiers boots F&C and LGIM funds from ethical strategy

As alluded to in an article for Portfolio Adviser’s November issue, there were several ethical vehicles that Courtiers head of fund and asset management Caroline Shaw hinted no longer met the strategy’s requirements. Courtiers' ethical strategy employs a negative exclusionary screening process, or what Shaw calls a ‘dark green’ ethical strategy.

Shaw and her team felt three funds in particular – F&C Responsible UK Equity Income, F&C Responsible Global Equity and L&G Ethical Trust – did not have mandates that were strict enough to reflect Courtiers’ ethical stance nor that of its clients.

After a bit of digging, the Courtiers team found that the screening processes and mandates of the three funds in question allowed them to hold, what were in their view, ‘borderline stocks.’

F&C’s UK ethical equity income fund held shares in Shell temporarily, for instance, following its merger with BG Group. Although the fund was in compliance with its mandate and disposed of its Shell shares within a six-month time frame, Shaw felt many of her clients would not be comfortable to learn the fund held the oil giant at any point.  

Similarly, the F&C Responsible Global Equity fund, which uses the same screening process as the UK ethical equity income version, had among its holdings. The Courtiers team felt that Amazon’s chequered past on labour rights matters made it incompatible with a ‘dark green’ mandate.

“F&C argued that they are engaging with Amazon to improve standards,” Shaw said. “However, we felt that, given the large universe this fund had to invest in, there was no need for the exposure to this stock. Our clients are likely to have seen the BBC Panorama documentary exposing the poor labour standards in Amazon’s warehouses and would therefore be surprised to see it in their portfolio.”   

“It is also worth noting that the F&C Global Equity team use MSCI research to give ESG scores to each company,” she continued. “Amazon scores a 16 in Environmental, 24 in Social and 38 in Governance, providing an overall score of 26 (out of 100). So, with this poor ESG score and the media coverage on labour standards, we felt this did not meet our criteria of a “dark green” stock.

So, while F&C believed its engagement with Amazon’s management was enough to render the stock acceptable in the context of its ethical fund, Courtiers disagreed. “This difference of opinions was one reason for our sale,” Shaw stated.


Overseas earners will be key amidst 2017 inflation

Sponsored by Neptune

Overseas earners will be key amidst 2017 inflation...

A by-product of sterling weakness is inflation, and we expect this to continue to gather steam over the coming months, with energy and food prices the hardest hit....

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

AXA Distribution Fund
AXA Distribution Fund

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address



Investment Strategy




PA Alternative Ucits 2017 Congress
PA Alternative Ucits 2017 Congress

Tuesday 25 April
The Langham, London

PA Europe 2017
PA Europe 2017

Thursday 11 May
Furniture Makers' Hall

PA Channel Islands 2017
PA Channel Islands 2017

Wednesday 24 May
Royal Yacht Hotel, Jersey

PA UK Equity 2017
PA UK Equity 2017

Thursday 15 June
Radisson Blu Edwardian Bloomsbury Street Hotel

Sponsored Content

Investment Strategy