Ethical Stakeholder Child Trust Fund

Luce_B

Long question, but I am trying to figure out the following: will an ethical stakeholder CTF that only invests in UK shares that tracks the performance The FTSE4Good UK 50 Total Return Index potetnially give as much return as a stakeholder CTF that invests in UK and overseas shares and tracks the performance of a number of stock market indices in the UK, Far East, North America and Europe? Or is the potential difference negligible and it's just about what sits morally right with you? If anyone can help my puzzled mind, I'd appreciate it! Thank you in advance.

Reaper

I am guessing you are comparing the 2 Family Investments options.

The ethical index is tightly focused and the worldwide one is widespread. Speaking in general terms that means the ethical one is more volatile as it is not as diversified. However there is no reason (in general terms still) why a tighly focused fund would do any better or worse than a widespread one.

BUT... in this specific case
1) you are concentrating on the UK. Up to you what you think the outlook of the UK is but if you think it is worse than other nations you might prefer to diversify.
2) Currently many are starting to look at defensive stocks such as tobacco which do not vary much with the ecomonic cycle. An ethical fund would not invest in that (but can invest in other defensives such as utilities).

There are no sure answers though. Nobody can really predict future performance.