Morningstar today published a report, How Does European Sustainable Funds’ Performance Measure Up?, examining the performance of sustainable open-end and exchange-traded funds versus traditional peers in seven popular Morningstar Categories. This report spans nearly 4,900 funds domiciled in Europe, including 745 sustainable open-end and exchange-traded funds.
- Average returns and success rates for sustainable funds across seven Morningstar Categories suggest that there is no performance trade-off associated with sustainable funds. In fact, a majority of sustainable funds have outperformed their traditional peers over multiple time horizons.
- Over the 10 years through 2019, nearly 59% of surviving sustainable funds across the categories considered have beaten their average surviving traditional counterpart.
- More sustainable funds have survived in the past 10 years, in relative terms. Of sustainable funds available to investors 10 years ago, 72% have survived, compared with less than half (45.9%) of traditional funds.
- Sustainable funds held up better than their traditional counterparts during the COVID-19 sell-off, delivering superior returns in all but one category.
- Fees are a crucial consideration when selecting a sustainable fund. Lower-cost options tend to have greater odds of success