Socially Conscious Global-Equity Funds Deliver on Their Promise

Socially conscious funds rank higher on sustainability metrics than other funds, based on holdings-level portfolio data. 

Thomas Furuseth 05/10/2016

(ESG) metrics.

We decided to examine how well socially conscious funds deliver on their promise. First, we searched Morningstar Direct for all Europe-domiciled funds assigned to the three global large-cap Morningstar Categories: large value, large blend, and large growth. We then used the flag that identifies intentionally socially conscious funds to distinguish them from non-socially-conscious funds. Finally, using the Morningstar Sustainability Rating for funds, we mapped socially conscious funds against the defined large-cap universe to observe the relative distribution of their ratings. We found that these funds do have a strong positive bias toward ESG factors as measured by the Morningstar Sustainability Rating.

As illustrated in the exhibit below, 36% of the socially conscious funds that we examined earn 5 globes, more than 3 times what’s expected from the overall universe. At the other end of the spectrum, only 2% of such funds earn 1 globe, while 10% of funds overall earn 1 globe. More than 60% of the socially conscious funds earn 4 or 5 globes, while only 12% earn 1 or 2 globes.

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Om forfatteren

Thomas Furuseth

Thomas Furuseth  er analytiker og redaktør på Morningstar.no. Han har en mastergrad i økonomi fra Handelshøyskolen BI med spesialisering i finans.

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