stolinski Fund Review

Fund Review – Unicorn UK Ethical Income Fund

(Review from 2019 plus usual disclaimers apply)

Unicorn UK Ethical Income Fund

Ethical Criteria

To their credit, the Unicorn ethical criteria was quite easy to find, on page 50 of the prospectus which was easy to find on their website –

Ethical Criteria and Investments:The fund’s predefined ethical criteria and the ethical nature of the fund’s investments are reviewed on a quarterly basis by the ACD [referring to Unicorn Asset Management]. The ACD operates a screening process which identifies those companies and organisations that, according to internal and external research and analysis, do not meet the agreed ethical criteria. The policy considers all of the following ethical issues:

    • Alcohol
    • Armaments
    • Gambling
    • Pornography
    • Tobacco
    • Human rights
    • Animal testing
    • The Environment

The ACD’s reports for the fund will provide further information. A full specification of the criteria is available from the ACD upon request.

So I requested the full specs and got a fast reply, which was quite informative.

Basically the Unicorn UK Ethical Income Fund is the Unicorn UK Income Fund (which contains 37 companies) with extra screening. The negative screening outlined above takes out 2 funds, then there is an ESG (Environmental, Social and Governance) test. Then there is the Unicorn Internal Assessment, which apparently removed another 6 tests. That only indicates to me how toothless the first two steps were. So i think we are now left with 29 undisclosed companies.

Top holdings

So what about the top10 holdings? Let’s take a look:

  • 1 CINEWORLD GROUP
  • 2 PHOENIX GROUP HOLDINGS PLC
  • 3 4IMPRINT GROUP PLC
  • 4 MARSHALLS
  • 5 DAIRY CREST GROUP
  • 6 TELECOM PLUS
  • 7 VESUVIUS PLC
  • 8 JAMES HALSTEAD
  • 9 RPS GROUP
  • 10 MUCKLOW (A&J) GROUP PLC ORD

One by one

To have Cineworld the multinational cinema conglomerate as the top holding at over 5% is interesting. Here’s their ethical principles from their annual report:

Notice it doesn’t mention their workers and Picturehouse (owned by Cineworld) employees in the UK have been striking for a living wage for several years now.

Unsurprisingly Dairy Crest make dairy products, includign many household names. Therefore they should be immediately cut out on animal rights grounds.

I actually had a good laugh with my dad trying to work out what Vesuvius do. For a brief moment I knew what tundish was. It turns out they are a global leader in metal flow engineering!? Their annual report mentions ‘ethical’ 14 times, but always very briefly. I mean, Vesuvius develops innovative, customised high-quality products, services and solutions, to be used in extremely demanding, high-temperature industrial environments so as long as they aren’t being total dicks how can what they do be ethical or not?

James Halstead plc is a major international group of companies that manufacture many of the notable brands in commercial, contract and consumer flooring.

 

2020 EDIT – LOL I left this 2019 review halfway, but I may as well have published it

VERDICT = NOPE

stolinski Uncategorized

The enemy

Suddenly as I browse through all this nonsense I wondered what the enemy is doing. How do you invest in arms companies?

It’s simple, it’s called “defense”.

Boeing (BA) is known for its commercial jets, but its defense and space programs accounted for $6.59 billion in the second quarter.

Northrop Grumman’s (NOC) revenue was $8.9 billion in Q2 and $33.8 billion in 2019. Its market cap is $54 billion.

Lockheed Martin (LMT) is the biggest defense contractor and is now the largest U.S. aerospace company by valuation. Lockheed’s revenue was $16.22 billion in Q2 and $59.8 billion in 2019.

Raytheon and United Technologies completed their $100 billion all-stock merger in early April to become Raytheon Technologies (RTX).

General Dynamics’ (GD) revenue was $9.3 billion in Q2 and $39.3 billion in 2019. Its market cap is nearly $43 billion.

Thanks so much Investors.com!

stolinski Fund Review

Fund Review: Kames Ethical Cautious Managed (Class B) (Acc)

[Review from 2019] Disclaimer this is uh just like y’know my opinion maaaan

Kames Ethical Cautious Managed (Class B) (Acc)

This fund is the only “ethical” fund in the Hargreaves & Lansdown Wealth Top 50. I personally don’t really see where the ethical side of things lies.

Having Coca Cola as one of the top 10 holdings is a massive red flag. This is a fizzy sugary drink which uses 3 litres of drinking water to produce 1 litre of product. The company has been invovled in human rights abuses, including the murder of trade union officials in China, Colombia,Guatemala, India and Mexico. Check killercoke for all the information.

Almost 50% of the holdings are bonds, which I doubt are ethical. These are the sort of holdings that come up if you go to page 224 of the 2018 annual report (pdf):
Bank of Scotland, Santander, Rabobank, Sainsbury’s Bank, Transport for London, Esure, Legal & General, AA, Dignity.

Er… So what’s the screening criteria? Well after 20 minutes of googling I was none the wiser except for finding a few references to the ethical criteria being listed elsewhere. I finally found the right link. kames claim “All three ethical funds we manage are designed to meet the needs of clients who wish to make investment decisions based on strong ethical principles. These are often referred to as ‘dark green’ funds, with ethical screening criteria which are clear and unambiguous”
Further, “Our ‘dark green’ screen is ideally suited to investors looking for a more stringent ethical philosophy. It adopts a negative approach that screens companies out of our funds’ potential investment universe if they engage in certain unacceptable activities. Examples of our screening process are shown below.”
Then we have a fairly typical negative screening list. The categories are as follows:

  • Animal welfare
  • Military
  • Nuclear power
  • Environment
  • Political donations
  • Genetic engineering
  • Gambling
  • Alcohol
  • Tobacco
  • Pornography
  • Banks
  • Oppressive regimes

This is not a bad list necessarily, but obviously not very good if it lets through the companies listed above. I prefer positive screening as made by a bank like Triodos, which only invests in projects which it believes are benefitting culture, environment

Simply put though, this is far from a stringent screening. It’s not even dark green. These people are bullshitters.

VERDICT NOPE

2020 update – LOL not much to add, I guess I just ran out of stea,m, it’s quite depressing checking all these funds advertised as ethical and whatnot only to find out they are SHITE

stolinski Effective altruism, My investments, My story

Loanstock investment in peril

I said in a previous post about my ethical investments And I must say, so far so good for me! I haven’t lost any money yet.

Then of course the next day I got an answer to an email asking about loanstock repayment saying that the housing cooperative had fallen apart and had been fined by the FCA for not submitting taxes for two years. At this stage we are discussing repayment plans and since some friends are/were involved i think i will get my £2000 back, but it did make me think about the frailty of investments. And also about the wisdom of mixing friends and money.

On the flipside, this is the first blip I have had in twenty years of ethical investment.

2020 UPDATE – The story I was given didn’t stack up, but I got my money back so I didn’t press further.

Conclusion – be wary of mixing friends and money! Without keeping an eye on this investment, I would have lost it.

More philosophically, some investments don’t work out.