Poor ethical performance

By THIS IS MONEY
Updated:

 

I HAVE invested £2,500 in a stocks-and-shares ethical Isa over the past four years, which is currently worth just over £1,000. The Isa was provided by NPI which has been taken over by Hendersons who assure me my investment will see much better growth soon. Do you agree, or should I switch to another ethical fund? WB, Lancashire

Ryan Hughes at Chartwell Asset Management says: Equity markets generally have suffered from three consecutive years of falling values. Unfortunately, ethical funds have suffered further due to their restrictive investments remit.

A good example of this is tobacco stocks. Tobacco is a very defensive stock and its movements are not closely correlated to the market. However, most ethical funds are unable to invest in these stocks.

Your Henderson fund has been slightly underperforming its sector, and to make matters more complicated, the fund manager has now left. Although there is every chance the new manager may be able to turn this fund's performance around, we feel that there may be internal issues within Henderson, as we have started to see many of their funds underperform their sectors.

I recommend a fund switch into the ISIS Stewardship fund, as this has greater potential to recoup your losses. Before proceeding, please refer to the ISIS fund's objectives to unsure that its ethical criteria match yours.

• Read more about ISIS Stewardship.

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