Threadneedle Investments is to launch the UK Social Bond fund to retail and institutional investors which will back compaines that promote social welfare.
The City-based group is launching the fund with Big Issue Invest, the social investment arm of The Big Issue magazine in January. Threadneedle is providing £5m of seed capital while Big Society Capital, the world’s first social investment bank, is contributing £10m.
Threadneedle said the fund, which will be managed by Simon Bond, was the first of its kind with daily liquidity, offering retail investors access to the social investment space.
Threadneedle said the fund will invest in companies, associations, charities and trusts in social intensity areas including affordable housing and property, community services, employment and training, financial inclusion, health and social care, transport and communications, and utilities and the environment.
Campbell Fleming, chief executive at Threadneedle, said the “landmark fund” came at a time of “significant need and demand for social investments”.
“We have worked with Big Issue Invest to develop a concept that allows people to direct a portion of their savings into investments with a social benefit, through a transparent and liquid vehicle which also aims to generate a return in line with a UK corporate bond index,” he said.
“The UK Government has been vocal on its plans to bring investment into public services through new financial initiatives. The UK Social Bond fund complements these efforts and is the first fund of its kind to bring social investment to mainstream UK investors.”
The fund will have a minimum investment of £2,000 when accessed via platforms and will have an annual management charge (AMC) of 0.3 per cent for both retail and institutional investors.
The AMC will be split between Threadneedle and Big Issue Invest, further supporting the work of Big Issue Invest and its parent The Big Issue in financing business solutions to social problems and tackling homelessness.
Threadneedle will contribute a portion of its fee to the Threadneedle Foundation, a dedicated entity through which the company provides support for charitable activities.