Want to grow your money faster than the broader economy? Go even greener! Investors who have focused on ESG (environmental, social, and governance) funds are smiling lately due to lower exposure to fossil fuels and downside protection from last year’s market slumps.
Those are the results in from Bloomberg’s 4th annual ranking of large US ESG funds. Some of the impact is coming from company employees who are demanding stronger internal climate policies — remember how more than 350 Amazon workers challenged their company for weak environmental practices? Conversely, companies that take the route to stifle internal debate over climate change are increasingly finding that are facing legal actions and marketing crises.
Lots of other pressure is coming from investors themselves.
One thing is certain: ESG policies are on the increase, and that means there will be even more opportunities for investors to translate their green holdings into positive returns.
What Trends are Emerging in ESG Mutual Funds?
Bloomberg’s 4th-annual ranking of the largest environmental, social, and governance funds with 5-year track records shows sustainable investing is for green-conscious investors as well as individuals who are simply on the lookout for money-making opportunities. Assets managed by the 75 retail funds in the survey reached up more than 34% to $101 billion last year as socially conscious money managers made the decision that sustainable investing is the way to new growth opportunities.
Here are the big winners.
- The $878 million Ave Maria Growth Fund was the top performer in 2019.
- The $3.8 billion Calvert Equity Fund was next.
- The $4.9 billion Putnam Sustainable Leaders Fund followed.
All three funds posted gains of more than 35%, compared with the S&P 500’s 31.5% with reinvested dividends. Morgan Stanley’s $3.9 billion Global Opportunity Portfolio and the $2.1 billion Brown Advisory Sustainable Growth Fund placed atop the rankings in the five-year period.
Trends in emerging technology, transparency requirements, and social factors are some of the primary factors driving these ESG investments. Corporate boards seem to be stepping up to the need to pay greater attention to how ESG can impact a company’s bottom line, and institutional investors are integrating ESG factors into their investment decision-making.
Tech funds (Alphabet, Microsoft, and Amazon) and credit card companies (Visa and Mastercard) were leaders in the ESG rally. Healthcare technology conglomerate Danaher Corp, which focuses on products from innovative consumer packaging to drinking water purification, is an example of a cutting-edge business that has ESG investors looking closely.
Want to see the full list of the biggest ESG funds that are winning the market? Check out Bloomberg Green for the fun details.