Morningstar recently released their latest sustainable mutual funds report, so here’s an update from my last video on this topic.
American investors continue to increase their holdings in sustainable mutual funds and sustainable ETFs to the tune of $30.7 billion through the first three quarters of 2020. By early July, we passed last year’s record of $21.4 billion. And by the time we celebrate the New Year, we may have doubled that record.
For context, in Q3 of 2020, investors pulled $118.5 billion OUT of traditional U.S. equity funds and put $3.7 billion INTO sustainable funds.
The Financial Services Industry + Sustainable Mutual Funds
The financial services industry points out various factors supporting this growth:
- Morningstar says: “Sustainable mutual funds continue to perform well relative to the broader universe of funds under uncertain market and economic conditions, which have underscored the value of considering ESG-related risks.”
- Morgan Stanley: “The urgency of the pandemic, climate change, and the movement for racial justice, even the election, have likely spurred more interest among investors to align their investments with their broader concerns.”
- UBS: “Sustainability is at the heart of the COVID recovery plan for many governments, which will likely support ongoing investments in sustainable industries.”
Want to discover how you can make your portfolio more sustainable without sacrificing returns? Book time with us for a portfolio review!
Sustainability makes sense
I’d like to make this point: There are more and more studies showing that ESG practices and financial performance are linked. Companies with strong sustainability practices
- have better credit ratings and a lower cost of capital,
- deliver greater operational performance, and
- see positive impact on stock price performance.
It simply makes sense. You don’t find sustainability data in traditional financial statements, yet the practices underlying that data can drive long-term financial performance.
Sustainable investing is like taking a look under the hood at what companies are actually doing, along with the risks and benefits of those activities.
- Are the companies in your mutual funds wreaking havoc on the environment, creating risk? Or are you investing in mutual funds, ETFs and companies that are leading on stewardship? Are they evolving in ways that will enable them to successfully transition to a lower-carbon world?
- How do the companies you support treat their most valuable asset: their employees? Are your investments funding practices that cause high turnover and recruiting costs? Or are you supporting companies that retain talent, building institutional knowledge that supports innovation and growth?
Your Investments Make a Difference
We can analyze and sprout data until the planet’s 988 million cows come home! Yet while that data is important, so are logic and common sense.
PEOPLE, PLANET AND PROFIT. If the first two aren’t stable, it’s much more difficult to generate consistent, sustainable profits.
Are you considering shifting some or all of your investments into more sustainable ones? Let us help you take an easy, no-obigation first step. We’ll provide a quick analysis to show you what’s in your portfolio from a sustainability perspective. What are you doing well and where are the greatest opportunities for improvement? Just set up a review appointment and we’ll send you a link to securely upload account statements. Once they arrive, we’ll get to work and walk you through the results!
