The Ethical Partnership Ltd

The inherent uncertainty within the investment market has allowed the ethical partnership to analyse those strategies that lead to uncertainty and to develop new strategies to combat future investment problems.

The solution, we believe, was to offer a Discretionary Portfolio Management Service (DPMS).

This is not a new idea, but it got us thinking about how to bring that ethos into the socially responsible and ethical investment market place.

We wanted to create the essential elements of a Socially Responsible Discretionary Management Service, which would include:

• model portfolios with different risk gradings to try to accommodate as many people as possible with the advantage of giving active investment management to everyone;
• access to the whole investment marketplace which had to include unit trusts, and open-ended investment companies as well as investment trusts and exchange traded funds;
• an in-built rebalancing program that would provide investors with the opportunity to enhance growth prospects but crucially offer less risk;
• create an automatic transfer facility so that clients with significant investment capital will maximise their annual ISA allowance;
• provide income seekers with the ability to budget by selecting a fixed income paid monthly by taking withdrawals from the cash account of the DPMS replenished by dividends.

As Independent Financial Advisers we have tailored ethical funds to a clients lifestyle, beliefs and investment risk attitude since the mid 1990s. We offer bespoke portfolios taking into account answers given in the ethical preferences questionnaire as well as offering the discretionary portfolio management service. We believe that most of the public yet to approach ethical investment would be prepared to put at least 10% of their capital into this fast growing sector. However, they would expect good performance to be a crucial ingredient of their investments, ethical or not.

With all this in mind we started the process to find a discretionary manager who could deliver our vision together with an efficient administration set up. After painstaking research, we appointed Minerva Fund Managers Ltd to manage these portfolios.

Minerva Fund Managers

Minerva Fund Managers specialise in Discretionary Portfolio’s of Unit Trust’s, Investment Trusts, Exchange Traded Funds (ETF) and Open-ended Investment Companies (OEIC). They are a family run investment company that has been running since 1990, with a proven track record of success.

In 1991 they developed a Minerva Fund Rating System, designed to measure consistency of performance and to enable them to choose the most consistent fund managers in their respective sectors. The rating system analyses data from the Lipper Reuters Hindsight database using the latest technology. Many investors in the UK use the Minerva Rating system and both private and institutional investors buy the New Minerva Report to access the ratings of the top and bottom funds. The Company’s directors all hold the Investment Management Certificate and between them have nearly 100 years of investment experience.

A DPMS should be looked at as a secondary investment management service. Primary investment management comes from the fund managers whereas secondary investment management comes from Minerva. Minerva will ultimately make investment decisions on your behalf.  These will include deciding on what percentage of your capital goes into each fund and from time to time re-balancing the portfolio to ensure it fits within your chosen investment risk category.

Re-balancing means ensuring that each portfolio stays within its remit of the maximum % allowed to be invested in equities, matching as close as possible to your chosen investment risk profile.

By offering a discretionary service we will, through Minerva, be able to move quickly on your behalf to take advantage of market opportunities as and when they arise. Part of the service will also include maximising Individual Savings Accounts (ISA) allowances, if requested. We are convinced we have created an active investment management service for ethical investors that offers the potential for good long-term performance combined with the knowledge that you are doing-your-bit. All this is supported by a quality administration service provided by Avalon, an excellent fund supermarket/wrap.

1. How Much Can I Invest?

It is your investment so you decide on the investment level you want to commit, subject to the minimum of £5,000 lump sum for the ISA and Portfolio and/or £100 pm, and for the Self-invested Pension Plan £25,000 lump sum and/or £200 pm.

2. What Investment Options Do I Have?

There are five portfolios to choose from:

• The Conservative Portfolio with a maximum 20% exposure to Equities.
• Two Balanced Portfolios, Balanced Income and Balanced Growth, which will include a mixture of Fixed Interest Funds, UK Equity Funds and Global Equity Funds.
• Two Adventurous Portfolios which will include UK Equity and Global Equity Funds. If you are tempted by this risk category, it is recommended to do so only after reviewing whether the investment risk is acceptable to you.

You select the Socially Responsible Portfolios in which to invest your contributions. The Avalon Socially Responsible Discretionary Portfolio Management Service Guide provides details of the various choices open to you together with an explanation of how you can subsequently change your choice of investment medium. Your choice will depend primarily on your attitude to investment risk, the length of investment time and whether you wish to invest for income, for growth or for a combination of both.

Before making your investment decision we advise that you read the description of the options in the product guide carefully as the risk ratings vary between the available portfolios . Below we describe the different levels of risk in detail:

Conservative:

Investments should safeguard capital with limited exposure to risk with the possibility that returns may not keep pace with inflation. Investments will not include equities but could include gilts, property and corporate bonds.

Balanced:

You are prepared to accept some risk to capital in exchange for the possibility of returns that are better than inflation albeit in a collective environment to spread the risk. Investments could include equity and fixed interest unit trusts, exchange traded funds (ETF), and open-ended investment companies (OEICS).

Adventurous:

You accept that greater risk must be taken in order to achieve better than average investment returns. You are prepared to take risk with capital and understand that capital may be lost. Investments could include unit trusts, open-ended investment companies (OEICS), exchange traded funds (ETF) and investment trusts.

3. Socially Responsible Investment Does Not Mean Lower Returns

These portfolios invest across a spread of what we regard as the best ethical and environmental funds, with committed managers who will follow ethical and environmental objectives with an emphasis on positive criteria.

You can select more than one portfolio to match more accurately your investment objectives and risk profile . Portfolios can hold up to 20% in cash.

You should note that investment values can fall as well as rise and that past performance is not a guide to future performance. Should you cash in you may not get back your original capital.

Any investments entered into are considered to be for the medium to long term and it is recommended that they should be retained for a minimum of seven years.

4. Discretionary Portfolio Management Service

So, in summary we have designed five portfolios:

• Socially Responsible Conservative (single contributions only – 3 out of 10 risk rating)
• Socially Responsible Balanced Income (single contributions only – 4-5 out of 10 risk rating)
• Socially Responsible Balanced Growth (single and regular contributions – 5-6 out of 10 risk rating)
• Socially Responsible Adventurous Saver (regular contributions only – 7 out of 10 risk rating)
• Socially Responsible Adventurous (single contributions only – 8 out of 10 risk rating)

The balanced income and conservative portfolios are designed to pay you a regular monthly income and this will come from the cash account  which will be replenished mainly from the dividends received from the various funds. Gains may also be taken from invested funds, when appropriate, to replenish the Cash Fund.

As a guide we would recommend starting the income at no more than 5% of the original investment to give the portfolio every chance to grow in the long term. Then the income can potentially rise as a defence against inflation. At our voluntary annual review meetings you can decide on the level of income needed for the forthcoming year.

We believe that Minerva’s expertise will enhance your socially responsible investment portfolio with Avalon and the cost is very reasonable – just 0.25%pa, which is a competitive price to pay for a professional discretionary portfolio management service. This charge is taken out of the cash account in the Avalon portfolios.

Your investment is administered and held by Avalon with Minerva providing the discretionary portfolio management service.

5. What do I do next?

The most important features of the SRDPMS are highlighted above but are covered in more detail in the SRDPMS guide which you can receive by post. If you would like to receive the guide please phone 08456-123411. 

5.1 Financial Advice

This does not represent personalised advice and is not a recommendation that the SRDPMS matches your financial requirements. If you should have any doubts about whether this product meets your needs you should contact us for financial advice on 08456-123411 or e-mail us at enquiries@the-ethical-partnership.co.uk.

5.2 Execution-Only (no financial advice)

If you elect to invest in the SRDPMS, without taking advice, once you have received all the relevant literature (via post or e-mail) please post the following items to Avalon (address on the application form) :

• A completed Avalon SRDPMS application form (remember to sign Part D, Part F (if relevant), Part G (if investing on a monthly basis), and Part H (if transferring existing ISAs) using the following link (please be patient as it may take a little time to download):
  • SRDPMS Dual Application Form
  • SRDPMS Fact Sheet
• A cheque made payable to Avalon Client Money Account
• A photocopy of your passport and/or driving licence for proof of identity and a utility bill for proof of address (anti-money laundering requirements)

If you have any queries or would like to make an appointment to see one of our Directors please phone us on 08456-123411.

Please refer to our client agreement terms at the bottom of this page as well as the Key Features Document and the Discretionary Agreement Form which are accessible via the following internet links. Key Features ; Discretionary Agreement Form (again please be aware that these pages may take a little time to download depending on the speed of your broadband)

If you do not seek financial advice The Ethical Partnership Ltd will not take an initial charge but will receive 0.5%pa of the Portfolio value (i.e. if the portfolio is worth £50,000 in five years time we will receive £250).