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Rathbone Ethical Bond

Elite Rated by FundCalibre

This fund invests in quality investment grade bonds. It has a higher income target than most of its peers. Ethical exclusions are simple: No mining, arms, gambling, pornography, animal testing, nuclear power, alcohol or tobacco, which rules out about one third of the index. All positions must also have at least one positive Environmental, Social or Corporate Governance quality.

Company Description

Established in 1999, Rathbone Unit Trust Management is the asset management subsidiary of Rathbone Brothers Plc. It was awarded the Elite Provider for Equities in 2016. Rathbone Brothers Plc is listed on the London Stock Exchange and employs more than 250 investment professionals in a number of offices around the UK.

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Fund Manager

Bryn Jones has been managing this fund since November 2004. Bryn studied Human Geography at the University of Birmingham- learning how people act the way they do is a very useful tool, particularly when meeting company management teams. Before joining Rathbones, Bryn worked with Merrill Lynch Investment Managers.

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My fund is a top performer with one of the best yields in the corporate bond fund universe and the bonus of a strong ethical screening process brought to you by a team with over 20 years of ethical investment experience

Bryn Jones - Fund Manager

The Investment Process

The fund has a 4-step investment process: Idea generation comes first with extensive research and meetings. This is followed by a ‘four Cs plus’ approach to credit quality assessment, which looks at character, capacity, collateral and covenants. Relative valuations are considered in the penultimate step of the process. Then the ethical screen is applied as the final stage. Bryn will hold a decent position in bonds he likes and zero in those he doesn’t.

Risk

The risk profile for this fund is average relative to its sector (IA Sterling Corporate Bond). But it is not low-risk. In the words of Bryn, it is not a diversification from equities or somewhere to hide if things get nasty. It tends to do better when markets are rising steadily or falling, and underperforms in strongly performing gilt markets.

Our Opinion

This fund typifies stable management, with Bryn having been there for over 10 years. It has managed to outperform regardless of its ethical constraints, illustrating that income and ethics can be combined without sacrifice. It is a solid core investment grade fund.

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