Monday, August 06, 2012

JP Morgan loses faith in Catholic fund

https://encrypted-tbn3.google.com/images?q=tbn:ANd9GcTwjnQDSQO6Q_DKlmvlFbmBPewgDDcdEEq-raF7SXP-vDW_MbTdewJP Morgan Asset Management is closing its first fund investing in line with the tenets of Catholicism, after it failed to obtain the blessing of enough investors.

The fund manager is liquidating the Global Catholic Ethical Balanced Fund it launched just over a year ago, according to a notice in the Financial Times this week.

The Luxembourg-based fund invested in global equities and bonds that met ethical criteria developed in line with Catholic principles. 

As of May 31, the fund had raised $5.3m, a little more than one sixth of the $30m threshold outlined in the prospectus. 

In an interview last year with the public-private partnership charged with promoting and developing Luxembourg’s financial services sector, portfolio manager Gareth Witcomb said the fund was the brainchild of the firm’s Italian sales force and consultancy Gruppo Re, which saw an opportunity for denominational investments.

The search for appropriate equity and debt investment was carried out by ECPI, a sustainability research firm, which screened stocks and bonds for products such as alcohol and contraceptives, as well as evaluating them against such principles as civil rights, attitudes towards the death penalty and corporate citizenship. 

They aimed to pick only those which fell in line with Catholic beliefs. 

JP Morgan then researched which of that pool would be the best investments. Fixed-income investment was limited to European government bonds as a result of its investment guidelines. 

A committee of “high-ranking members” of the Catholic Church met quarterly to review the fund's investments.

The fund underperformed its benchmark for the second quarter of this year, which ended June 30. 

It had posted a total return of 1.01% since inception, according to its latest quarterly report.

It is one of four funds being liquidated by JP Morgan AM, according to notices published in the Financial Times on Tuesday.

Investors have until September 11 to redeem their shares or convert to another fund.

The asset manager continues to offer Sharia-compliant offerings that invest in line with Islamic law.