UK blue chip companies are increasing their duty to socially responsible investing (SRI), according to Jupiter’s Chris Watt (pictured)
, who thinks investors would be surprised by the number of FTSE 100 companies who tick the ethical box.
Some of the most popular dividend-paying stocks among UK fund managers have taken big strides in the last decade or so in making their activities more ethical – a trend that Watt says he expects to continue.
Here are five that investors may wish to consider:
"Vodafone has identified opportunities in emerging markets where telecommunications have positive social and economic development impacts," said Watt, who heads up the Jupiter Responsible Income
"The company continues to demonstrate sector-leading behaviour in the area of corporate responsibility and recent engagement confirmed the wide scope of projects and initiatives that Vodafone is working on across its key issues."
Vodafone is the most-held stock in the IMA unit trust and OEIC universe, according to FE data, appearing in the top-10 holdings of 427 funds. In IMA UK Equity Income, 70 of the 101 funds in the sector hold the stock in their top-10.
Performance of stock vs index over 3-yrs
Source: FE Analytics
Vodafone has been one of the best-performing FTSE 100 stocks of the last three years, returning 62.33 per cent – more than twice as much as the All Share.
According to data from The Share Centre, Vodafone has a forecasted yield of 7 per cent.
"Centrica has established a position of leadership in promoting customers' efficient use of energy. The company also maintains strong levels of progress in decarbonising its energy-generation fleet," explained Watt.
Tineke Frikkee’s £2.27bn Newton Higher Income
fund and FE Alpha Manager Michael Clark’s Fidelity Enhanced Income
fund are among those with a top-10 position in the company. In total, 63 funds hold Centrica in their top-10.
It has a forecasted yield of 4.9 per cent
"GlaxoSmithKline is a leader in its sector on providing access to medicines in developing countries and environmental management," said Watt.
"The company's mission statement is to 'improve the quality of human life by enabling people to do more, feel better and live longer', which includes a commitment to tackling the three 'priority' diseases identified by the World Health Organization: HIV/AIDS, tuberculosis and malaria.”
GlaxoSmithKline has a forecasted yield of 5.1 per cent. It is second only to Vodafone in the popularity stakes, appearing in the top-10 of 423 funds. Glaxo is even more popular than Vodafone among UK Equity Income funds, with 79 of those in the sector holding it in their top-10.
Among its biggest admirers is Neil Woodford, whose Invesco Perpetual Income
fund has an 8.06 per cent stake.
The pharma company has returned 38.28 per cent over three years.
"Pearson's educational division offers positive social values, while strong policies are in place to manage its environmental impact, such as its carbon-neutral commitment," explained Watt.
"The company derives over two-thirds of its earnings from a market (education) that helps drive social development."
The company, which has a forecasted yield of 3.6 per cent, appears in the top-10 holdings of 40 funds in the IMA universe, including the five crown-rated Invesco Perpetual Global Equity Income
"Amlin is one of the largest independent insurers operating in the Lloyd's of London market, providing specialist insurance cover in the marine, aviation and commercial sectors as well as reinsurance," said Watt.
"The company continues to develop strong climate risk modelling for its business. It has a good and improving grasp of its corporate responsibility (CR) issues, and incorporates an extensive CR section into its annual report."
Amlin has a forecasted yield of 6 per cent. Only four funds hold it in their top-10 – among them is FE Alpha Manager James Henderson’s Henderson UK Equity Income
fund, which has five FE crowns.
Watt’s Jupiter Responsible Income holds Vodafone and Glaxo in its top-10 holdings. The £40m portfolio is currently yielding 3.9 per cent.
Performance of fund vs sector and indices since July 2001
Source: FE Analytics
According to FE data, it has returned 59.4 per cent since its launch in July 2001, easily beating its FTSE4Good UK Index, but falling short of its sector average and the All Share.
Watt has headed up the portfolio since January 2007, when he took over from Peter Hulse.
The fund has a minimum investment of £500 and a total expense ratio (TER) of 1.72 per cent.
All yield data in this piece is sourced from The Share Centre.