US: Sustainable funds outperformed their traditional peers in 2020 – Morgan Stanley

Sustainable funds outperformed traditional peer funds and reduced investment risk during coronavirus in 2020, according to the Morgan Stanley Institute for Sustainable Investing.

Key quotes

“An analysis of more than 3,000 US mutual funds and exchange-traded funds (ETFs) shows that sustainable equity funds outperformed their traditional peer funds by a median total return of 4.3% in 2020. During the same period, sustainable taxable bond funds beat their non-ESG counterparts by a median total return of 0.9%.”

“Sustainable US equity and taxable bond funds also proved less risky than their traditional counterparts in 2020. US sustainable equity funds’ median downside deviation was 3.1% less than traditional peer funds, and 0.4% less for US sustainable bond funds, compared to their non-ESG counterparts.”

“For the full-year 2019, sustainable equity funds outpaced traditional peer funds by a median of 2.8%, while sustainable taxable bond funds outperformed their traditional peer funds by a median of 0.8%.” 

“In any given year from 2004 through 2018, sustainable funds' median total returns were in line with that of traditional counterparts and provided more downside risk protection, especially during periods of increased market volatility, according to an Institute report issued in 2019.”