ESG funds outperform their stock market peers

The debate over whether investing with an eye on ESG principles makes money has increased in recent years as the global sustainable funds market has grown to over $2.2 trillion.

show market data that the average equity fund that adheres to environmental, social, and governance factors has lost slightly less money this year than products that track standard benchmark indices like the S&P 500.

Looking at the longer-term balance sheet also supports the notion that ESG funds can outperform.

According to Morningstar researchers, about 56 percent of US sustainable funds outperformed competing category groups in the three years ended Sept. 30.

That’s not a disagreement, at least for the next year. in one According to a Bloomberg survey, 65 percent of respondents expect ESG funds to underperform the broader market in 2023.

Of the 691 respondents, 264 expect ESG funds to “slightly underperform” and 184 predict “significantly underperform”.

But not everyone agrees. Lazard Asset Management’s Ross Seiden is among those who are more optimistic.

“We look forward to 2023 as we believe there will be opportunities to identify and invest in market-leading companies across a variety of sustainable technologies,” said Mr. Seiden, who oversees Lazard’s U.S. sustainable equity strategy. He pointed to energy efficiency, electric vehicles, solar power, water, carbon capture and sequestration as companies poised to benefit from the Biden administration’s anti-inflation bill.

Fionna Ross of Scotland’s Abrdn has a less bullish outlook.

“Given the challenges of 2022, there will be some recovery next year, but it will remain mixed due to inflation and other looming economic hurdles,” said Ms Ross, who heads Abrdn’s sustainability institute.

Half of the respondents who directly involved in ESG indicated that they expect the funds to underperform slightly or significantly. ESG funds outperform their stock market peers

Fry Electronics Team

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