All but one of the 100 largest ESG funds by asset size — comprising equity and fixed-income mutual funds and exchange-traded funds — posted negative returns for the year ended Oct. 31; however, on average, these funds still outperformed their benchmarks by 1.1 percentage points.
Over the three-year period, these funds topped their benchmarks, on average, by 0.6 percentage points, according to a report issued Monday by Opimas, a research and consulting firm focused on capital markets.
BlackRock ranked as the biggest ESG asset manager, accounting for 20 of the top 100 such funds, with total assets under management of $110 billion. DWS Group came in second place with $36 billion in AUM (comprising 11 funds), followed by Parnassus Investments with $33 billion (three funds).
Collectively, the top 100 funds have total AUM of about $441 billion.
The funds in the study "all rely on one or more ESG components in their investment strategy," said Anne-Laure Foubert, an Opimas analyst, in an email.
The best performer among the top 100 ESG funds was a money market fund, Morgan Stanley Institutional Liquidity Funds ESG Money Market Portfolio, with a one-year return of 1.2% through Oct. 31. All other 99 ESG funds posted losses during that period.
The largest individual ESG fund is Parnassus Core Equity Fund, which has $22.9 billion in assets.
By geography, 60 of the top 100 funds are domiciled in the European Union, while 32 are based in the U.S. Among non-EU states in Europe, the U.K. has three funds, while Norway and Switzerland have one each. The list of funds is rounded out by Japan, which has two ESG funds, and China with one.
By asset class, equity funds accounted for the bulk of the top 100 funds (74 funds and 81% of total AUM). Fixed-income funds accounted for 17 funds and 12% of total AUM. The other types of funds included hybrid, money market and real estate investment trusts.
Of the top 100 funds, 42 were launched in 2016 or later. The oldest fund on the list, Robeco Sustainable Global Stars Equities Fund of the Netherlands, was launched in 1929.
In addition, of the top 100 funds, 59 are actively managed, 26 are index-based ETFs and the remaining 15 are index-based mutual funds. By AUM, the actively managed funds accounted for $256 billion, index-based ETFs ($117 billion) and index-based mutual funds ($68 billion).
Among equity funds, the best performer for the year ended Oct. 31 was M&G (Lux) Global Listed Infrastructure Fund, which slipped 0.1%. The worst performer among this segment was BNP Paribas Energy Transition Fund, which plunged 46.9%.
Among fixed-income ESG funds, the top performer was Invesco Floating Rate ESG Fund, which fell 3.2% for the one-year period, while PIMCO GIS Emerging Markets Bond ESG Fund ranked as the worst performer, sinking 22.3%.
