Go woke or go broke. That seems to be the message from the latest Spot the Dog report by City experts into underperforming investment funds.
A quarter of the worst-performing funds in the UK are based on ‘woke’ investment practices, according to to the research by BestInvest.
This will leave savers who have money in these funds wondering what they should do about it.
The BestInvest investment platform says funds with strategies in line with the environmental, social and governance (ESG) philosophy were among those that had performed particularly badly over the past three years.
ESG focuses on investment in companies deemed to be positive for the planet and society as well as promoting responsible business practices.
As a result, ESG-focused funds tend to avoid sectors such as oil and gas, mining and defence.
Despite enjoying initial success for their ‘woke’ credentials, these funds have found themselves under pressure in recent years as spiralling energy bills and the invasion of Ukraine by Russia have sparked renewed interest in what were previously considered ‘unethical’ investments.
The revolt was recently highlighted by Charles Woodburn, the boss of UK defence giant BAE Systems, who said investors who shunned defence stocks in the name of ESG causes have ‘swung back to a more sensible position,’ although he noted it ‘sadly’ had taken the outbreak of war in Ukraine for the trend to reverse.
Charles Woodburn, the boss of UK defence giant BAE Systems, says that the Ukraine war had reversed the trend of investors shunning defence stocks in the name of ESG (environmental, social and governance) causes
The decline in ESG fund performance was revealed as part of BestInvest’s twice-yearly assessment of ‘dog funds’ – defined as investment companies that have performed worse than their benchmark stock market index by at least 5pc for three years in a row.
The report showed that overall, the amount of savers’ money held in the 137 funds on the list had shot up by 26pc to £67.4bn since the last survey was compiled in August.
‘Our Spot the Dog analysis is designed to remind investors to monitor their portfolio at regular intervals to assess how well their assets are performing,’ says Jason Hollands, managing director of Bestinvest.
So are you invested in one of these ‘woke’ funds that is losing you money hand over fist?
Below, we take a look at some of the worst-performing ESG-focused funds, their main investments and their performance for investors to decide whether they should pull their money out sooner rather than later.
Top 10 worst-performing ‘woke’ investment funds:
Artemis Positive Future
Size: £6.1m
3-year performance vs benchmark: -63pc
The Artemis Positive Future fund describes its investment strategy as backing companies that fit its criteria for ‘positive environmental and/or social impact’ as well as firms that have the ‘potential to create transformational change.’
Its largest holdings are telecoms firm Motorola Solutions as well as data firm Verisk Analytics, Japanese insurer Sompo and financial tech outfit Fiserv.
Along with its pro-ESG strategy, the Artemis fund also says its fund manager plans to ‘engage with investee companies on material ESG issues, primarily through constructive dialogue,’ to achieve ‘positive development.’
But it is the worst performing of all the ESG funds available – and maybe worth ditching if you hold it.
ESG encourages investment in firms deemed to be positive for the planet and society as well as promoting responsible practices
Aegon Sustainable Equity
Size: £167m
3-year performance vs benchmark: -49pc
This fund says its investment approach involves ‘selecting companies with strong sustainability initiatives, targets, and carbon commitments,’ adding that its strategy ‘may appeal to those who prioritise responsible resource use and positive societal and environmental impact.’
Its portfolio is dominated by computer chip makers, with ‘Magnificent Seven’ member Nvidia its largest holding followed by Taiwanese group TSMC and California-based chip firm Marvell Technology.
Other notable holdings include Japanese electronics outfit Keyence, gym chain Planet Fitness and UK data firm RELX.
And with its performance earning it a place high on the ‘dog funds’ list, investors may wish to get rid.
L&G Future World Sustainable UK Equity Focus
Size: £17.9m
3-year performance vs benchmark: -47pc
The fund aims to have at least 90pc of its investments in UK companies that it ‘believes have strong growth prospects.’
As a result, its top holdings are mostly London-listed companies including catering firm Compass, engineering outfit Weir and banking giant Lloyds.
In its prospectus, the fund says it will not invest in any companies…
Read More: Is YOUR money in a failing woke fund? Our money experts reveal the 10 worst… a