Do ESG Strategies Outperform Broad Indices?


According to the The Forum for Sustainable and Responsible Investment, over 16% of money managed in the United States is done so in a socially responsible way. Further, from 2012 to 2014, there has been a 76% growth rate in the number of assets managed by socially responsible investing and a 36% increase in the number of Economic, Social, and Governance (ESG) mutual funds. With the increased flow of funds into socially responsible investing, investors need better ways to understand and interpret their ESG exposures. In this article, we’ll review a method by which you can interpret ESG exposures within an attribution framework.

Do ESG Strategies Outperform Broad Indices?

A performance attribution report can help to answer the question with a traditional allocation vs. selection breakdown. When we analyze the MSCI EAFE ESG Index against the MSCI EAFE for the past three years (ending 6/30/2016), we see that the ESG index outperformed by over 100 basis points.

Read the full article by Ashley Fritz, Portfolio Analytics Specialist

Share Button