Impact Blog
Pulling rank: Sustainable funds lead in Barron's mutual fund survey for a fourth year

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      By Anthony EamesDirector of Responsible Investment Strategy, Calvert Research and Management

      Boston - Once again, sustainable funds took center stage in Barron's annual survey of mutual funds, showing their financial as well as environmental, social and governance (ESG) mettle. In its fourth annual survey of "big-cap" equity mutual funds in the Morningstar database, Barron's found that investors who favored sustainable funds beat the broad market in 2019, just as they did in the three years' prior.1

      According to the January article, "Mutual Funds That Rank High on Sustainability Are Outperforming the Market," 41% of the sustainable, large-company funds on Barron's list outpaced the S&P 500, compared to 29% of all actively managed funds, based on 2019 one-year returns. In 2018, 39% of sustainable large-cap funds beat the S&P 500.

      Making the cut

      Barron's chose its final list of 189 funds based on the large-cap, U.S. stock funds in the Morningstar database with above-average Morningstar sustainability ratings (placing in the top third of their categories or higher), assets of at least $300 million, and a minimum of one year's performance. Barron's then ranked the funds by one-year returns for the 12 months ended December 31, 2019.

      Calvert Equity Fund captured the #11 slot on Barron's list of mutual funds that rank high on sustainability factors, while Eaton Vance Atlanta Capital Select Equity Fund was ranked #5. In the article, Joe Hudepohl, portfolio manager of Calvert Equity Fund, comments, "If you're not paying attention to ESG, you're ignoring a data point. And that's something you can't really afford to do."

      ESG sees record-setting flows in 2019

      ESG investing is rising to the top in more ways than one. Asset flows into ESG funds reached $20.6 billion in 2019, smashing 2018's prior record of nearly $5.5 billion, reports Morningstar.2 In terms of total assets, one out of every four dollars under professional management in the United States, or $12 trillion, is directed to sustainable, responsible and impact strategies, according to the latest US SIF report.3


      This trend indicates that investors see ESG as a material, critical component in the analysis of a business's competitive position. As ESG metrics advance and continue to demonstrate the value of ESG factors in terms of risk mitigation and financial reward, we believe the demand for responsible investments will continue to climb.

      Bottom line: ESG investing is rising to the top in more ways than one, and for good reason. As evidence continues to mount that ESG strategies can offer material insight into business risk and opportunity — along with competitive performance — ESG products are poised to capture an increasing share of the investment marketplace.