As part of its yearly "Heroes and Villains" awards, Barchester Green named the SWIP funds within its five worst "villains" of the ethical investments sector.
The only provider to feature more than once on the list, it is the second year running the Scottish Widow Environmental Investor has been included.
Part of the reason behind their places in the villain group is the high percentage of capital in their top ten holdings. The Scottish Widows Ethical Fund, for example, has 57% of its fund in its top ten companies.
Jonathan Clark, chairman of Barchester Green Investment, said: "For Oeics that are supposed to spread risk for investors, this is not good enough. The good ethical funds manage to spread the investments out properly."
"These funds display not only poor performance but have a very high proportion of their fund in the top ten holdings, many of which seem to have little reason to be in a fund with these specialist criteria."
In its defence a spokesperson from SWIP, said: "Both Scottish Widow’s funds follow strict restrictions of what they can and can not invest in. As a result they only have an available universe of between 40 – 50% of the FTSE Allshare of which financials make up more than a quarter. As a result of this the funds’ performance has been negatively impacted.
"The funds’ independent committee believes that banks are fundamental to the functioning of society. Indeed, many UK banks prioritise lending to low carbon businesses and we believe that to omit them from an environmental & ethical universe may be counterintuitive."
Also part of the villains group are the Prudential Ethical Fund and Zurich Environmental Opportunities Fund, both for the second year running.
Mark Peters, Head of Retail Propositions at Zurich, said: "The fund has been closed to new investors for some time and is only available to existing customers who have an Eagle Star Bond, or an Eagle Star Pension.
"We changed the name of the fund to the UK Opportunities to reflect the nature of the investment strategy and its listing in the ‘all companies’ sector. We also wrote to all customers invested in the fund in July to notify them of the proposed change."
Finally, the CIS UK FTSE 4Good Tracker has been added to the list.
Clark explained: "The fund’s catchy name does not reflect its credentials: CIS claims an ethical background stretching back to the advent of the trade union movement, but to trade on that heritage by placing investors in BP, Glazo, AstraZeneca, Barclays, Shell and Rio Tinto is stretching credibility some way.
"What’s more, 48% of the fund in the top ten holdings suggests little effort has gone into stock selection."
Heroes
Meanwhile, the "heroes" list for 2011 has two previous award winners and three new recruits.
The Kames Ethical Equity Fund (a 2010 hero as the Aegon Ethical Fund) and the Wheb Sustainability Fund both make repeat appearances.
For the first year the Aviva Sustainable Future Managed Fund has been included for its "balanced approach to ethical investing", with just under 50% invested in the UK, 16% in North America and 13% in developed Europe, while the rest is spread around the world.
Last year, a favourable mention was given to Aviva’s Sustainable Future range of funds, but no single fund was included on the heroes list. Clark said the range is very well managed and has a lot of good thinking behind it.
The range was initially worked on by Clare Brooke, who is now the manager of the Wheb Sustainability Fund.
Another notable inclusion is the Henderson Industries of the Future Fund, on the basis of its record to date. But Barchester Green said it was concerned at the recent decision by Henderson to remove their specialist SRI team and outsource the research to their general global and UK teams.
"This is a very strange move by Henderson given the company’s stated commitment to SRI and means the Global Care Growth Funds and Industries of the Future Fund will now be run by managers of mainstream funds with no specialist experience," Clark said.
Finally, the Cheviot Climate Assets Fund was praised for its wide range of assets, including 15% in fixed interest, which make it ideal for those wishing to invest in a lower volatility, positive environmental fund.
The funds are not ranked one to five in each category because they are all different types of funds with various aims, according to Clark, and so he does not think they should be compared on a like-for-like basis.
