The decision to remove the fund followed a shift in the fund’s investment mandate from UK to Global.
interactive investor, the UK’s second-largest direct-to-consumer investment platform, has removed L&G Ethical Trust from its ACE 40 rated list of ethical investments following a shift in the fund’s investment mandate from UK to Global.
Until now, the fund has tracked the FTSE 350 Index and was a UK Equity, ‘Low Cost’ option within the ACE 40. As of today, 28 January 2021, changes will take effect for the fund to have a global mandate, track the MSCI World SRI Index and be renamed Legal & General MSCI World Socially Responsible Investment (SRI) Index Fund.
The fund had performed in line with expectations since its addition to the ACE 40 list and had kept tight tracking errors to the FTSE 350 over both the short and long term considering its ethical exclusions.
The decision to remove the fund, which was in the ‘Considers’ part of the ii ACE ethical categories (Avoids, Considers, Embraces) was made in line with the ii ACE 40 methodology. The ACE 40 list is monitored continuously for ‘red flag’ events – including a change in policy.
Dzmitry Lipski, Head of Funds Research, interactive investor, says: “The objective of the fund historically was to provide growth by tracking the performance of the FTSE 350, excluding shares of companies whose business does not meet a range of ethical and environmental guidelines determined by an external agency chosen by the manager. In broad terms, the fund had a higher weighting in telecoms, media, retail and financial services than the full FTSE 350 index. This came at the expense of the tobacco and defence sectors.
“This change in rationale also increases the sector and geographical diversification of the fund and reduces the concentration as the new index covers 23 countries and 385 constituents. The result of this change is that the fund will go from 100% to under 5% invested in the UK, meaning the fund no longer has a UK focus and, therefore, is no longer appropriate for its position on the ACE 40 within UK Equities.”
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.