Threadneedle’s new social bond fund boosted by €38m from Warwickshire

Government says investment is a “real signal” of investor appetite

Warwickshire County Council in central England has invested £30m (€38.2m) into a UK social bond fund launched with seed capital from Big Society Capital and run by Threadneedle Investments and Big Issue Invest, the social investment arm of homeless publication the Big Issue.

In addition, a further £10m has been committed over the next few months.

The Threadneedle UK Social Bond Fund – available to institutional and retail investors from January 2014 – aims to achieve both an investment return and a positive social outcome. It is managed by Threadneedle Credit Fund Manager Simon Bond and launched with £10m of seed investment from Big Society Capital and £5m from Threadneedle itself.

Threadneedle is the UK-based fund giant which has £92.8bn under management.

John Betts, Head of Finance at Warwickshire County Council, said: “In the Threadneedle UK Social Bond Fund we found an investment opportunity that not only generates solid returns, but also allows us to put our money to work for the benefit of society. Our investment supports organisations that underpin sustainable economic development and job creation up and down the country.

“The daily pricing and liquidity gives us the ability to shift back into cash at short notice if necessary, which was animportant factor for us – typically social investments require investors to lock their money away for a number of years.

Betts added: “We were impressed by Threadneedle’s commitment to the cause and high quality client service delivery.”

The fund invests in daily tradable debt instruments from organisations which support socially beneficial activities and economic development. Just over 10% of its £49.2m portfolio is invested in the Midlands. Holdings include bonds from Derbyshire Healthcare, East Midlands Housing Association, Walsall Housing Group, Coventry Building Society, Birmingham Airports and WM Housing Group.

Investments are assessed by a ‘Social Advisory Committee’ comprising Nigel Kershaw, Chief Executive of Big Issue Invest and Chairman of the Big Issue; Sarah Forster, Deputy CEO, Big Issue Invest; Mark Hepworth, Head of Research and Policy, Big Issue Invest; Iain Richards, Head of Governance and Responsible Investment, Threadneedle; Simon Bond, Credit Fund Manager, Threadneedle; John Hale, former Manager of Investment Affairs at the Association of British Insurers.

Rob Wilson, Minister for Civil Society, said Warwickshire’s decision was “a real signal that there is appetite from big investors for products that work to deliver both socially and financially”.