‘We pay you 6pc and create £114m of social good a year’

Investing is about two things: growing the value of your money and collecting income along the way. But what if there was a third motive? What if your investment could do social good that you could see and measure?

This was the reasoning behind the launch of the Civitas Social Housing investment trust in 2016. The fund buys and leases out specialist social housing blocks across the country, focusing on units that house young adults who need supported living arrangements.

The trust is managed by Andrew Dawber. He tells Telegraph Money how he balances economic and social returns, how the trust – which features in our new Ethical 10 list of best-buy funds – provides a sustainable 6pc yield and what he has learnt from leasing out properties to struggling housing associations.

WHAT DOES THE FUND INVEST IN?

We own properties in the social housing sector, which is regulated, and lease the buildings to housing associations or local authorities on long-term contracts of around 25 years. We currently own the biggest portfolio of specialist housing in Britain, with nearly 600 properties.

YOU CLAIM TO HAVE A SOCIAL PURPOSE. HOW?

The tenants, and there are 4,000 of them, are generally young adults with long-term care needs who suffer from autism or have mental health needs or learning difficulties. We provide goodquality buildings for them to live in.

Before they move into our buildings they’re in a hospital or care facilities.

We are independently assessed for our social good by The Good Economy, a consultancy. Using something called the “social profit calculator”, it found we produced £114m of social value every year – or £3.50 for every £1 we invest.

The buildings we own also save the state around £60m a year, so over a 25-year lease that’s £1.5bn in taxpayer savings.

Civitas Social Housing provides homes for 4,000 young adults in need of extra care, its manager tells Taha Lokhandwala

HOW DO YOU MAKE A PROFIT?

The economic return is as important as the social return, of course. We repay investors in two ways: firstly by seeing the value of our property portfolio increase over time (and the share price normally tracks this) and secondly with income.

The trust receives rents that are normally paid or supported by the Government, and everything we own has to be fully supported by the local authority, so it’s quite secure. At least 90pc of this income gets distributed to investors every year. We have a yield of 6pc, far more than you would get from a government bond.

We do make sure our rents are not too high though, so they are sustainable. We never charge more than the median level for the area.

We’re also very conscious of risk. We either buy buildings that already exist or take ownership of buildings we commission only once they are complete, so we’re not building or taking on the risk of construction.

THE SHARE PRICE HAS STRUGGLED SINCE FLOAT. WHY?

The shares had been trading nicely

but took a hit in April and the price moved to a discount of 19pc against the value of the fund’s assets.

This was because the regulator of social housing raised concerns that housing associations – which we lease to – were not operating efficiently and were overstretching themselves.

However, a lot of progress has been made since then. We still want to see improvements in how housing associations operate financially and we’re involved in helping them to improve.

Ultimately, we think there has been a big overreaction to the regulator’s

£1,000 invested at launch would be worth £922 today

report. We have delivered everything we said we would.

WHAT HAS BEEN YOUR BEST INVESTMENT?

Our most secure investment has been where the housing association has a 25-year lease with us and also has a long-term contract with a specialist care provider, so we have double protection. This accounts for a third of the portfolio.

AND THE WORST?

First Priority, a housing association, had financial difficulties so we had to move the building lease to another association. It taught us to pay closer attention to our partners and we adapted our process so we spend more time with them now.

DO YOU INVEST IN THE FUND AND HOW ARE YOU PAID?

The managers buy into the fund at full price whenever we issue new shares. Everyone in the team gets paid a salary and bonus paid on individual and trust performance.

WHAT WOULD YOU HAVE BEEN IF NOT A FUND MANAGER?

I would like to have played cricket for England but that’s unlikely to happen.