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Laxman Pai, Opalesque Asia: Sustainable funds saw a median return of 6.9% in the first half of 2023, beating traditional funds' 3.8% and reversing their underperformance in 2022, said a study.
According to a new "Sustainable Reality" report from the Morgan Stanley Institute for Sustainable Investing, investor demand also remained strong as sustainable funds' assets under management (AUM) reached record levels.
"Investors are increasingly turning to sustainable funds with sustainable AUM now at ~8% of total AUM globally," said Morgan Stanley's Chief Sustainability Officer and CEO of the Institute for Sustainable Investing Jessica Alsford.
Last year, a rapid rise in interest rates contributed to declines in both equities and bonds. Value stocks (those trading cheaply) and high-quality, short-duration fixed income benefited, which contributed to the relative underperformance of sustainable funds in 2022 since sustainable funds tend to skew away from these categories. This year, a rebound in growth stocks (which prioritize long-term potential) has especially helped sustainable funds' relative outperformance.
By asset class, sustainable equity funds posted the strongest gains, showing a 10.9% median return and outperforming traditional equity funds' 8%. Fixed-income outperformance was more muted, with sustainable funds at a 3.8% median return vs. traditional funds' 2.2%.
In the first half of the year, sustainable funds attracted cumulative inflows of $57 bill...................... To view our full article Click here
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