Aberdeen Standard Investments has launched a UK equity strategy with Big Issue Invest, focusing on impact investing.
The Employment Opportunities Fund will be managed by investment director Lesley Duncan and, according to the firm, will invest in companies that promote and implement good employment opportunities and practices, and where at least half the employees are UK-based.
Ms Duncan aims to identify companies that are committed to delivering sustainable employment opportunities and also have growth potential and strong long-term financial returns.
The impact criteria will typically include companies paying above average wage rates that are located in deprived areas, offer training opportunities and/or employ young people, with the majority of those being in the UK.
Aberdeen Standard Investments said creating good employment opportunities is one of the most significant benefits businesses bring to society, as the value of human capital has become an increasingly critical part of company strategies.
The Big Issue Group said the collaboration with Aberdeen Standard Investments will help Big Issue Invest advance its mission to “dismantle poverty” and create opportunity for people and communities across the UK.
A percentage of the fund’s management fee will go to The Big Issue Group, so the organisation can finance social enterprises and charities offering business solutions to social problems.
To date Big Issue Invest has invested in more than 350 organisations.
Lesley Duncan, fund manager at Aberdeen Standard Investments, said: “By investing in quoted UK companies the fund seeks to harness equity market returns while also helping to direct significant capital in support of the UN Sustainable Development Goal 8 – full and productive employment.
“A special job assessment framework underpins the investment process, guiding portfolio selection and helping the fund meet its impact objectives, thereby helping to address inequalities in the UK."
Matthew Coppin, co-owner of Castlefield Advisory Partners, said: “My initial impression of the fund is good. The connection with Big Issue Invest is a good component that retail investors will be interested in. Part of the management fee going to The Big Issue is also a commendable act.
"Playing devil’s advocate, I hope this doesn’t become an excuse for allowing certain things through. Although it is a nice thing to do, the real desire for social impact through investment is to create and promote change so that it isn’t necessary to depend on charity to offer short-term solutions.
“A real sustainable impact approach to social issues comes from making positive change and reducing issues faced in this area, whether by policy or movement in a certain direction. One key factor is the underlying holdings within the investment portfolio. Careful attention needs to be paid to what selections are made to build the portfolio.
“Lack of focus can be a criticism of some impact portfolios. Due to the massive rise in demand, it can sometimes seem like they are jumping on the bandwagon. It can be called impact, but what the impact is isn’t clear. Without clear focus, holdings with adverse impacts can creep in."