Threadneedle Investments is to launch a new social investment fund which will buy bonds issued by charities and other social sector organisations; creating a pooled fund enabling retail investors to have instant withdrawal facilities.

The Threadneedle UK Social Bond Fund, which has been launched in partnership with Big Issue Invest, will launch with £10m in seed investment from Big Society Capital and £5m from Threadneedle.

Nick O’Donohoe, chief executive of Big Society Capital, said it was the first fund allowing any individual to become a social investor.

The fund will be available to retail and institutional investors from January 2014, and it plans to invest in charities and companies working in social areas, such as affordable housing and property, community services, employment and training, financial inclusion and health and social care.

A spokesman described the fund as a “first of its kind with daily liquidity”.

“The Fund provides daily liquidity by investing in trade-able bonds, and offers investors an income stream that is transparent and predictable. Other funds in the market are typically illiquid and have an ultimate target return after a set term of investment (often several years).”

The fund will target a return in line with that of a UK corporate bond index.

Nigel Kershaw, chief executive of Big Issue Invest, said: “The Big Issue is committed to preventing poverty which can lead to people falling into homelessness. The UK Social Bond Fund extends and supports this mission by investing in organisations that create social benefits and support more sustainable economic development and job creation in the UK.

“We have developed a unique social assessment methodology, with input from Threadneedle’s governance and responsible investment team.”

Under the methodology, potential investments are reviewed across five dimensions to assess the overall “social intensity” of qualifying bonds.

The five dimensions are – primary and secondary social outcomes; geographical focus; the intensity which an investment offers in terms of tackling social issues; the nature of the financing and an ESG assessement of the bond issuer.

The fund’s minimum investment amount is £2,000. It has an annual management charge of 0.30 per cent, which will be split between Threadneedle and Big Issue Investment. Threadneedle will contribute a portion of this to the Threadneedle Foundation.