RATHBONE ETHICAL BOND FUND: A ‘glorious fundraiser’ that helps save the forest.

Finance director Bryn Jones describes himself as a ‘glorious fundraiser’ – but ‘there’s no point in baseball banking if people don’t pay’.

It’s all tongue in cheek, of course, but in layman’s terms, it’s pretty clear how he makes money for investors from the investment fund he manages – Rathbone Ethical Bond.

‘Our role as bond fund managers is to lend money to large companies and governments around the world,’ he explained. ‘In return, they pay interest every year until their bonds mature.

‘Hopefully, if we’ve picked up good quality bonds, especially on the corporate side, then we’ll get our money back. We are happy and so are our fundraisers.

‘The trick – and it’s important – is to avoid liability from potentially troubled companies, such as Thames Water.’

He added: ‘The goal of our fund is simple: to provide our investors with less than the money they receive – and to offer something like an insurance policy in their portfolio. invest when stock markets fall.’

It is a diversified project that has received funding from asset managers, financial advisor networks and investors. The fund has £2 billion in assets and holds 217 bonds in 24 companies.

While there is concern over inflationary pressures arising from the combination of Labour’s Budget attack on British businesses and Donald Trump’s threat to impose tariffs on US imports, Jones believes bond markets currently provide ‘many opportunities’.

He says bond yields of between five and six per cent are ‘comfortable’ at the moment – especially if rates come down as expected and bond prices rise.

‘Of course, if inflation rises to seven percent in the next few years,’ he added, ‘it would be better to buy gold or short-term government bonds.’

The portfolio includes a number of bonds issued by major corporate companies – Aviva, HSBC and Santander. Its largest holding is in UK gilts – namely ‘green gilts’. A specialist division at Rathbones – Greenbank – ensures that all bonds held in the fund meet social and environmental criteria.

‘We can only buy UK government bonds where the proceeds will be used to improve the environment or infrastructure,’ says Jones. ‘We can’t buy machines to pay for nuclear power stations or buy weapons.’

In line with its ethical investment approach, Rathbone Ethical Bond is an investor in the Global Amazon Reforestation-Linked Outcome Bond fund, which lends money to help reforest the Brazilian Amazon.

It also has financial resources to help develop wind and solar farms. They include an investment in a bond issued by social interest company Burnham and Weston to finance a local solar farm. ‘These bonds don’t make up the bulk of the portfolio,’ says Jones, ‘but the returns are good.’

In terms of investment returns, Rathbone Ethical Bond has delivered a total return of 9.5 per cent over the past year and 38 per cent over the past ten years. It has outperformed the average price from its best peer group over the past one, three, five and ten years.

Like all bonds, bond prices fell in the fall of 2022 in response to the non-financial tax cuts announced by then-Chancellor Kwasi Kwarteng. Annual fees are reasonable at 0.67 percent.