Frank Sherman, Executive Director of Seventh Generation Interfaith
CNBC reviewed years of Morningstar data on the performance of socially responsible funds versus traditional funds and benchmarks and found that there is no significant performance drag. Similar research done in 2015 using meta-analysis covering 85 studies reached a similar conclusion: ESG funds result in neither a big cost, or financial benefit, to investors. However, they found that funds designed to exclude certain “sin” stocks or sectors, such as tobacco, alcohol or guns — don’t tend to measure up. “The ESG performance of companies appears to be something that can be used to generate value in a portfolio; traditional exclusion can be a drag,” said Jon Hale, head of sustainability research at Morningstar.
Todd Rosenbluth, director of mutual fund and ETF research at CFRA, commented that “getting comparable performance and feeling better about socially responsible investments is a win for investors.” This confirms the view that you can do good while doing well financially.
You can find tools and research on ESG funds on our Resource webpage.