Sustainable funds lead the pack in Barron's annual mutual fund survey

Timely insights from portfolio managers and industry experts on the issues that matter most to institutional investors.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.

  • All Posts
  • More
      The article below is presented as a single post. Click here to view all posts.

      By Anthony Eames, Director of Responsible Investment Strategy, Calvert Research and Management

      Boston - The evidence keeps mounting that environmental, social and governance (ESG) investments can deliver competitive financial results while striving to benefit society and the planet. In its third annual survey of mutual funds in the Morningstar database, Barron's found that "stockpickers who gravitated toward sustainable companies beat the broad market in 2018, just as they did in 2016 and 2017."1

      Making the cut

      According to the January article, "The Top Sustainable Funds," the Barron's list "identifies market-beating funds with high sustainability ratings." To arrive at its final list of 188 funds, Barron's combed the Morningstar universe for large-cap, actively-managed U.S. stock funds with above-average Morningstar sustainability ratings (placing in the top third of their categories or higher), assets of at least $300 million and a minimum of one year's performance. Barron's then ranked the funds by one-year returns for the 12 months ended December 31, 2018.<.p>

      The results showed that in 2018, 39% of the sustainable, large-company funds on the Barron's list outpaced the large-cap S&P 500, versus 36% of all actively managed funds. Calvert Equity Fund captured the No. 3 spot on the list.

      ESG inflows at record levels

      ESG investing is rising to the top in more ways than one. U.S. assets directed to sustainable, responsible and impact strategies climbed to $12 trillion in 2018, a 38% increase from $8.7 trillion in 2016, according to the latest US SIF report.2 That represents one out of every four dollars under professional management in the United States.

      In fact, flows into ESG funds have reached record levels, while the overall U.S. fund universe has lost ground. In 2018, ESG funds saw nearly $5.5 billion in net inflows, while the U.S. fund universe posted its lowest calendar year flows since 2008, according to Morningstar.3

      Calvert Blog 2-5-19b

      In the four years following the financial crisis (2009-2012), annual net flows into ESG funds averaged only $136 million. From 2013-2018, average annual net flows were more than 30 times higher, at $4.4 billion, and for just the past three years, net flows have averaged $5.2 billion.4

      As ESG metrics advance and investors increasingly recognize the potential value of ESG strategies in terms of risk mitigation and financial reward, we believe the demand for responsible investments will continue to climb.

      Bottom line: ESG investing is rising to the top in more ways than one. As ESG metrics advance and the risk-reward benefits of ESG strategies become more evident, we believe Responsible Investing will be seen as a new touchstone for managing money.