From January through April of this year, $12.2 billion flowed into ESG funds – which was more than double the amount that flowed in during that same time period in 2019.
According to Morningstar, more than 70% of ESG funds across all asset classes performed better than their counterparts during that time period.
Many consider ESG investing to be a passing fad or more akin to a niche investment. Current performance and market share suggest that may not be the case.
Steady growth
The amount of ESG funds has steadily grown since first entering the market in the late 70s. They continue to gain in popularity as investors grow more aware and concerned with how companies operate, their impact on the environment, climate change, etc.
In a recent study, State Street Associates found that companies that protected their labor forces and supply chains in recent months saw more inflows and better returns than their peers.
Doing the right thing
It seems companies “doing the right thing” were faring better. Some of the big tech stocks, like Microsoft and Alphabet Inc, have done quite well. It’s no secret, technology companies have developed reputations for treating their employees well and having lower carbon emissions.
While ESG portfolios are often overweight in the technology sector, some experts don’t believe they are solely responsible for the positive performance. Other drivers, like low energy exposure and an array of stocks, may have more impact.
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