Lee Qian, joint manager of the £10m Baillie Gifford Positive Change fund, said his aim is to find companies that can double investors' money in five years.
Mr Qian said the fund differs from many of its peers that apply a rigid ethical screening process which means “some shares just get dismissed as the usual suspects".
"The aim of my fund is to say, there is no perfect company, but there are companies where they are making a positive difference in an area and that is enough to outweigh other negatives,” he said.
Managers of the fund first look at whether a company is a good investment, then outsource the question of whether the company makes a positive impact to the corporate governance team at Baillie Gifford.
This has led, Mr Qian said, to some companies going into the portfolio that might not make it into other funds of a similar mandate.
He said Tesla, the US maker of electric vehicles, would fail many ethical screens on corporate governance grounds, but he has invested because the overall impact on the environment of electric vehicles means that, on an holistic view, the company is making a positive impact.
The South African insurance company Discovery is another holding in the fund, and one which Mr Qian said might not be found in other ethical mandates.
He said the company, which operates under the name Vitality in the UK market, is making a positive difference because its business model focuses on “rewarding” its customers for making changes to their lifestyle, including healthy eating and exercise.
Mr Qian said those health benefits are a positive for the world.
The manager had a major role in devising the structure of the Baillie Gifford Positive Change fund.
As a member of the Baillie Gifford graduate training programme he came up with an idea for a new fund and proposed it to the partnership.
Mr Qian’s was initiated by Baillie Gifford, with the seed capital for the fund coming from the company’s own resources.
He said growing up in China in 1990s and early 2000s he saw how people emerged from poverty in a sustainable way through capitalism, and wanted to run a fund that directed capital to companies helping achieve positive change around the world.
Mr Qian is one of six co-managers on the fund, two of the other co-managers, European equity head Tom Coutts, and emerging markets head Will Sutcliffe, are partners in Baillie Gifford.
Jason Hollands, managing director for communications at Tilney Group, said ethical funds have yet to gain significant momentum among UK investors as they tend to be more popular with younger people, who have less cash to invest.
david.thorpe@ft.com
