ESG investing is mainstream — and booming


Sustainable investing is no longer a specialized feel-good corner of the investing world. In 2021, ESG (environmental, social, and governance) investing is mainstream — and it’s booming.

As of 2019, one out every three dollars invested by Americans went to some form of sustainable investing — a total of more than $17 trillion — according to the Forum for Sustainable and Responsible Investing. Investor interest in ESG funds may have initially been driven by personal commitments to sustainability, but performance is an increasingly important part of the investment-decision equation.

According to findings by the Morgan Stanley Institute for Sustainable Investing, U.S.-based sustainable equity funds outperformed their traditional peers in 2019. During the extreme ups and downs of the first half of 2020, these funds outperformed traditional funds by an even wider margin. The Morgan Stanley report draws on analysis of more than 11,000 mutual and exchange-traded U.S.-domiciled funds.

As investors no longer need to choose between doing good and doing well, momentum for ESG investing is likely to build. In the Morgan Stanley survey, 85% of investors said they were very or somewhat interested in sustainable investments.

Several factors are likely to encourage greater interest in ESG investing: an increasing focus on businesses’ response to climate change; investor enthusiasm for the “social” side of ESG investing; and the potential for government actions promoting ESG investing.

In his first week in office, President Biden signed an executive order directing the Labor Department to review the Trump administration’s earlier decisions that had made it harder for fiduciaries of retirement plans to steer money toward ESG funds. In December, several representatives introduced bills in the U.S. House of Representatives promoting acceptance and use of ESG investments by individuals and institutions.

As interest in ESG investing continues to grow, FundVisualizer offers a variety of features that allow you to explore and understand sustainable investing options, and share information with clients. Here are a few examples:

Use the Explore tool to discover ESG opportunities

From the FundVisualizer home, select Explore and enter a fund name, ticker, or keyword such as “ESG” or “Sustainable.” Choose a fund and see the top 20 performing funds based on your reference fund’s share class and Morningstar category.

The results will show you how the ESG fund compares with other funds in the same category. Use the drop-down menu at the top to change the sort results, or use the filters on the left side to narrow down the results.

Compare funds and drill down into details

Once you have selected funds — either a selection of ESG or traditional funds in the same Morningstar category, click Create to see how they compare. FundVisualizer offers several charts that enable you to compare performance, top holdings, sectors and more. You can choose up to 25 comparison charts and share them with clients in a custom report.

For more information on using FundVisualizer, visit our resources page at FundVisualizer.com.

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