Is YOUR money in a failing woke fund? Our money experts reveal the 10 worst… and what

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 that violate L&G’s ‘climate impact pledge,’ or any firm that makes any money from nuclear weapons, firearms or gambling as well as those that make more than 5pc of their revenues from tobacco or alcohol products.

FP WHEB Sustainability Impact

Size: £586m

3-year performance vs benchmark: -46pc

The half-billion-pound fund describes its focus as ‘opportunities created by the transition to healthy, zero carbon and sustainable economies.’

Over a quarter of its portfolio is dedicated to investments classed as being in the ‘resource efficiency’ sector while another 12pc is focused on ‘water management’ and a further 11pc on ‘environmental services.’

Its top holdings include Autodesk, an engineering software firm, UK pharma giant AstraZeneca and Agilent Technologies, a maker of electronic equipment for science labs.

The fund also states its investment team are at the ‘leading edge’ of incorporating ‘environmental, social and governance factors into stock selection.’

Its performance certainly warrants its inclusion on the name and shame list – and may be one to exorcise from your portfolio.

AXA ACT People & Planet Equity

Size: £27m

3-year performance vs benchmark: -44pc

This fund says its goal is to invest in companies that ‘contribute to the achievement of the United Nation’s Sustainable Development Goals,’ a set of guidelines adopted by the UN in 2015 which aims to achieve 17 feats by 2030 including eliminating poverty, developing clean energy and combating climate change.

Its largest investment is German computer software giant SAP followed by Nvidia and rival US tech giant Microsoft. Other notable holdings are Irish chemicals group Linde and American accounting software specialist Intuit.

AXA ACT Framlington Clean Economy

Size: £46m

3-year performance vs benchmark: -41pc

Much like its fellow fund People & Planet Equity, the Clean Economy fund focuses its investment strategy on hitting environmentally focused targets set by the UN.

Its portfolio also contains many similar names including Nvidia, Linde and SAP alongside other companies such as Japanese car giant Toyota and Xylem, a Washington DC-based water management firm.

Rathbone Greenbank Global Sustainability

Size: £75m

3-year performance vs benchmark: -41pc

Despite the ‘global sustainability’ in its title, this fund’s portfolio is dominated by large technology and financial companies with Microsoft, Mastercard and RELX its top three holdings.

Like others on this list, the fund says its strategy is geared towards companies ‘that operate sustainably’ and are ‘committed’ to hitting the UN’s goals.

‘We believe that companies displaying strong environmental, social and governance policies and practices are likely to be well positioned to deliver long-term value for investors,’ the fund says in its investment strategy statement.

It adds that companies in its portfolio must meet one of four criteria which include; ‘strong employment practices, sustainable environmental practices or community engagement and commitment to human rights.’

Ninety One Global Environment

Size: $583m (£461m)

3-year performance vs benchmark: -41pc

This fund describes itself as having an ‘environmental objective’ to make ‘sustainable investments that aim to contribute to positive environmental impact.’

The top holdings in its portfolio include Nextera Energy, a Florida-based firm focused on green power, rubbish disposal firm Waste Management Inc and Iberdrola, the Spanish group behind Scottish Power.

While most of its portfolio is based in the US and mainland Europe, another large holding in the firm’s roster is Chinese firm Zhejiang Sanhua Intelligent Controls, which claims to be the world’s largest supplier of air conditioning units.

Virgin Money Climate Change

Size: £60m

3-year performance vs benchmark: -36pc

This fund’s manager describes the companies it backs as being ‘hand-picked’ for their potential investment returns but also ‘the environmental solutions they aim to provide or leadership in their industry.’

It also points out it does not invest in companies that earn notable amounts of money from tobacco, fossil fuels or ‘controversial weapons.’

There are several familiar firms in its portfolio including Microsoft, its largest investment, as well as TSMC.

Other companies backed by the fund include IT and consulting giant Accenture, heating and air conditioning unit maker Trane Technologies and US firm Wabtec which manufactures equipment for the railways.

FP Octopus UK Future Generations

Size: £7m

3-year performance vs benchmark: -36pc

‘Building a sustainable planet, empowering people, and revitalising healthcare,’ are the three areas this fund says it bases its investment strategy.

It adds that the businesses in its portfolio have ‘the potential to transform the world for the better,’ adding that 10pc of the fees paid by investors into the fund are donated to the charity of its manager, Octopus Investments.

The firm’s UK-focused portfolio includes marketing group Next Fifteen as well as Harry Potter publisher Bloomsbury, AstraZeneca and fellow pharma firm Ergomed.