Asset business aims to aid charity funds

Newton Investment Management, a subsidiary of The Bank of New York Mellon, provides investment products and services to individuals, pension funds, charities and companies.

Newton has launched a fund for British charity trustees who are looking for "ethical" investments, and hopes to hire more staff in its Leeds office, which now has 11 employees, including five private client fund managers.

Aidan Butler, the head of Newton Private Investment Management in Leeds, said: "When the Leeds office was established in 1993, it was a reflection of the fact that wealth was not necessarily centred in London. We recognised that the private client market within the regions offered a lot of opportunity.

"We saw an opportunity to expand the Newton Private Client business in the North and are looking to grow further from here.

He added: "It's certainly our intention to continue to grow as opportunities arise. We are looking at recruiting further fund management resource over the next 12 to 18 months. The services we can offer are based upon an institutional level of research resource, coupled with a very local hands-on team of fund managers. That's something that sits very well with clients.

"The clients in Yorkshire are a very broad range, from family groups and associated trusts and pensions, through to charities, local authorities and smaller company pension schemes.

"The appreciation of risk among a number of asset classes is something that fund managers and clients have come to understand a lot more over the last 18 months to two years. We're still in an uncertain environment."

Newton held an event in Leeds to promote its socially responsible investment (SRI) fund for charities in Leeds.

The fund has screening criteria that reflects areas of concern for charity investors. For example, charities may not wish to invest in companies involved in gambling, pornography, animal testing and armaments.

Ruth Murphy, the director of business development (charities and private clients) said: "You have to allow intelligent fund managers to make some judgment about what they believe the investors in such a fund would find unacceptable.

"Armaments is probably the most complicated screening area. For example, do you want to avoid companies that make weapons for defending civilians? Or for attacking oppressive regimes?

"Do you want to exclude the contract catering companies who provide catering on UK air bases? Do you want to exclude the people who make the overalls for the aircraft engineers?

"Analysts at Newton and other firms talk to companies and they press them on these things. They say, 'Have you improved your corporate governance? Are you being accountable to your shareholders?'

"Most major UK companies have a greater awareness of that now and do publish their own corporate responsibility reports.

"This is a really tough time for charities. Some of them can live with the changing values of their investments. What they can't live with is a lower level of income from their investments."

NEWTON INVESTMENT MANAGEMENT

Newton was formed in 1978 as a joint venture with Reed Stenhouse, the Scottish insurance broker.

Following Alexander & Alexander's acquisition of the company in 1986, the company was reorganised and renamed Newton Investment Management. Newton's management bought out the Alexander & Alexander stake in 1992 and, in November 1994, Newton acquired the Capital House group of companies from the Royal Bank of Scotland PLC (RBS), with RBS purchasing a 33 per cent interest in the company.

In October 1998, Newton completed an agreement for Mellon, now The Bank of New York Mellon Corporation (BNYM), to acquire a majority interest in the company. At the beginning of July 2001, Mellon exercised its option to acquire most of the remaining shares. A further transaction in May 2002 completed Mellon's acquisition of the Newton Group. Newton was Mellon's first substantial acquisition outside the US.

Newton's chief executive is Helena Morrisey, a Cambridge University graduate who previously worked for Schroder Investment Management.