Finance Friday – October 14, 2016



That’s the proportion of sustainable investment funds that beat the market over the last year.

This might not sound so great, until you consider that just 12% of all actively managed funds can say the same. *

This is the first wave of such analysis, highlighted by Barron’s and based on the new Morningstar fund sustainability ratings.

Perhaps most interesting of all, most of the funds that rate highly on the Morningstar scale do not define themselves as sustainability-focused.

This reminded me of a conversation with one of my longtime Fidelity mentors, after I finished a long-winded explanation of ESG analysis and sustainable investing.  “Okay, I get that this ESG stuff helps you find companies that have great long term business prospects based on better products and services.  So, you mean, it’s just good investing, right?”

Yep, that’s right.


 * Of course, the Morningstar methodology is new, and the performance data cited is just 1 year. There’s plenty still to be understood about longer-term measures of sustainability and the interpretation of this sort of fund-level ranking… but it’s well worth considering nonetheless.


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