Impact Blog
Sustainable funds start strong in 2019, Morningstar reports

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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

      Boston - In terms of fund flows and performance, U.S. sustainable mutual funds and exchange-traded funds (ETFs) are off to an impressive start for the first half of 2019, according to mutual-fund tracker Morningstar. Fund flows are on pace to set a record-breaking 2019 and performance has been generally strong for funds that consider environmental, social and governance (ESG) factors.

      Flows into sustainable funds have set calendar-year records for each of the past three years and appear headed to an even stronger finish in 2019. Sustainable funds amassed an estimated $8.9 billion in net new assets through June, surpassing their $5.5 billion in flows for all of 2018, according to Morningstar.1

      Calvert Blog 8-6-19aa

      Looked at in terms of quarterly flows for U.S. sustainable funds, the second quarter of 2019 set a new record of $4.7 billion, quickly unsettling the first quarter's $4.1 billion record. Prior to that, the record high had been $1.9 billion in the fourth quarter of 2016.2

      Of 271 sustainable funds with positive flows, 15 funds garnered at least $100 million in net new assets in the second quarter, including two actively managed bond funds and 13 active and passively managed equity funds. Calvert US Large Cap Core Responsible Index Fund, Calvert Emerging Markets Equity Fund and Calvert Bond Fund were among those identified by Morningstar as attracting the most assets.

      Calvert Blog 8-6-19b

      Competitive performance

      Overall, sustainable funds have performed well in 2019 within their Morningstar Category peer groups. Nearly 60% ranked in the top half of their respective categories year-to-date as of June 30, and almost one-third (32%) ranked in the top quartile. Only 17% ranked in their category's bottom quartile.3

      Calvert Blog 8-6-19c

      In recent years, we believe ESG funds' dynamic growth has been spurred by both individual investor concerns and institutional mandates, which increasingly recognize the material sustainability challenges companies and society face today. When it comes to what motivates ESG investors, environmental issues like climate change and emissions generally top most lists, followed by human rights and corporate transparency. In some surveys, investors cite the current administration's environmental policies as a reason for their increased interest in ESG.4

      As year-over-year trends seem to indicate, we believe momentum for ESG investing appears here to stay. In our view, there is growing recognition that ESG strategies can deliver competitive performance as well as provide insight into areas of material investment risk and opportunity.

      Bottom line: Investors of all stripes are appreciating the material insight ESG factors bring to bear in assessing investment risk and opportunity. In view of the competitive performance of sustainable funds - and their burgeoning asset flows - we believe momentum for ESG investing appears here to stay.