Sustainable funds have outperformed their traditional peers in the first eight months of 2020 by up to 20 per cent, reveals a major new study.
Funds that invest using
Environmental, Social and Governance (ESG)
The gap between ESG and non-ESG funds is strongest in the IA North America sector, where it is close to 20 per cent. Brown
Meanwhile, the average ESG fund in the IA Global sector has made a 10.10 per cent total return up to August this year, while non-ESG funds have averaged a more modest 4.09 per cent.
Other ESG funds in the top quartile of this sector include Pictet Clean Energy, Liontrust Sustainable Future Global Growth, Janus Henderson Global Sustainable
Closer to home, the 19 ESG funds in the IA UK All Companies sector have weathered the coronavirus storm better than their conventional rivals with an average loss of 14.45 per cent. Non-ESG funds in this peer group have dropped by an average of 17.30 per cent.
Outperforming ESG funds here include Royal London Sustainable Leaders Trust (down 1.82 per cent), Ninety One UK Sustainable
It comes as Tribe Impact Capital, the UK’s first impact wealth manager, has reported a particularly strong performance of its sustainable funds in 2020. Its medium risk bespoke model portfolio has outperformed by more than 15 per cent since November 2016, compared to the ARC (the wealth manager benchmark).
More than half of this outperformance was in the first half of 2020 through Covid-19 related market turmoil.
Chief Investment Officer Fred Kooij said the portfolio has benefited from significant growth in three sustainable investment sectors; healthcare stocks, sustainable food producers and UK
Recent research by global funds network Calastone suggests that investment into global funds is being driven by ESG. Over the last year, one-third of the money going into global funds has ended up in those focused on ESG investing.