MSCI unveiled its scoring of some 21,000 mutual funds and exchange-traded funds on sustainability, the company announced in a news release.
The new MSCI ESG fund metrics, announced Tuesday, measure environmental, social and governance characteristics of portfolio holdings and rank funds based on a set of ESG factors, including carbon footprint, the news release said.
Each fund will receive an overall score, called the “fund ESG quality score,” which “reflects the ability of the underlying holdings to manage medium- to long-term risks and opportunities,” the release said. In addition, each fund will receive a peer group percentile rank and individual E, S and G scores.
“Transparency around the ESG quality of a fund’s holdings may be used by clients to complement their evaluation and due diligence of fund managers, but it does not provide an indication of the quality of a fund manager’s ESG strategy, capabilities, process or intentionality,” Eric Moen, managing director of MSCI ESG research, said in the release.
The mutual funds and ETFs MSCI analyzed totaled $6.6 trillion in assets and included U.S., global and emerging markets equity funds; government, investment-grade and high-yield fixed income funds; target-date funds; commodity funds; and funds in other asset classes.
Under the score’s scale, 10 represents the best quality and zero the lowest.
Government bond funds and commodity funds on average scored 6.5, the highest among asset classes analyzed by MSCI, followed by money market funds at 6.2.