More than half of ESG-linked funds outperformed the S&P 500 in the first several months of 2021 even as two new reports lay out opposing views about the factors driving the trend.
Using S&P Global Market Intelligence data, we tracked the price change for 27 ESG exchange-traded funds and mutual funds with more than $250 million in assets under management. The data shows that from Dec. 31, 2020, to May 17, 2021, 16 of those funds performed better than the S&P 500. Those outperformers rose between 11% and 29.3% over that period. In comparison, the S&P 500 increased 10.8%.
The 27 ESG funds in our analysis all saw their performance improve during the period reviewed, although to varying degrees. The top two performers — Ariel Fund and Ariel Appreciation Fund — are both managed by Ariel Investments LLC. Parnassus Investments’ Parnassus Endeavor Fund had the third-best performance with a 23.6% price increase.
The 11 funds that underperformed compared to the S&P 500 saw a price increase ranging from 2.6% for the Brown Advisory Sustainable Growth Fund managed by Brown Advisory LLC to 10.6% for the SPDR S&P 500 Fossil Fuel Reserves Free ETF managed by a unit of State Street Global Advisors Inc. The SPDR S&P 500 Fossil Fuel Reserves Free ETF performed the same as the S&P 500 during the first year of the pandemic and appears to thus far be tracking closely heading into mid-2021.
A prior review of how funds performed during the first year of the pandemic found that 19 out of 26 ESG-linked funds saw greater improvements than the S&P 500.
[Esther Whieldon and Robert Clark]