Sustainable funds faced a sharp slowdown in demand globally in 2023 amid political controversy and concerns about “greenwashing,” even as many outperformed the broader market when the recovery of technology-related stocks bolstered their returns. Environmental, social and governance (ESG) investing boomed in 2020 and 2021 during the COVID-19 pandemic as low oil prices spurred more investors to diversify beyond fossil fuels, and as fund managers sought to appear more climate-conscious. The category started to fall out of favor in 2022 as conventional energy prices soared.
Globally, funds classified as “responsible investing” recorded $68 billion of net new deposits in 2023 through November 30, 2023, LSEG Lipper data showed. That was down sharply from $158 billion for all of 2022 and from $558 billion for all of 2021. The funds’ performance often beat the broader market, buoyed by their heavy exposure to technology stocks, including some of the “Magnificent 7” like Apple and Alphabet, which rallied in the last few months as the Federal Reserve signaled an end to interest-rate hiking
The Dow Jones Sustainability World Index had a total return of 21.7 percent from the start of the year to December 19, 2023. It is a sustainability-focused subset of the S&P Global Broad Market Index, which had a total return of 17 percent. In 2022, that sustainability index also did better than the broader market, even as investors lost money. It had a total return of negative 15.6 percent while the broad index had a total return of negative 20 percent. http://tinyurl.com/339ahazn
Source: IBP