Market Minute

Vantage Financial welcomes guest contributions. Please know the information, opinions, and forecasts expressed in the article below are presented from unassociated parties and do not necessarily reflect the opinions of Vantage Financial Partners Limited. This article is shared as general information only and should not be considered advice.​​​

The Growing Popularity of Sustainable Investing
by Bob Veres with Insider Information

A growing number of investors are factoring in the social impact of their investment dollars when they buy mutual funds or ETFs—for a variety of reasons.  One reason is to avoid supporting companies or industries which, they believe, are not making the world a better place—such as weapons manufacturers, tobacco companies, or firms that have a track record of polluting the environment or running sweatshop factories in third world countries.

Other ‘socially-responsible’ investors embrace companies that they believe are enhancing our collective lives, which might include companies that produce solar, wind or other sustainable energy, who embrace diversity in their workforce and on their corporate boards, bring clean water to global populations or provide lending services to impoverished communities around the world.

Still others hope to mitigate downside moments in their portfolios by investing according to socially responsible or ESG (environmental, sustainable and governance; preferentially investing in companies that achieve better scores) believe that by screening out firms that are not sensitive to social issues they can reduce the risk of earnings surprises when a company is sanctioned or boycotted for its less-than-savory practices.

Whatever the reason, socially responsible and ESG investing trends are enjoying rapid acceptance among investors.   According to Morningstar’s fund research, $21.4 billion in new funds flowed into what it calls “sustainable funds” last year.  In 2019, 30 new sustainable funds were launched, and 38 more were added the previous year.  There are now 303 mutual funds and ETFs in what Morningstar considers to be its “sustainable universe”—following SRI or ESG principles, or both.

These funds are popular, but how well did they perform?  Morningstar reports that 35% of those funds finished in the top quartile of fund performance in their category—which is well above average for any sector.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. Where applicable, all data and information have been gathered from sources believed to be accurate such as the internet, non-affiliated 3rd parties, news articles, and professional subscriptions but this information is not warranted to be correct, complete, or true. 

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: IL

Website Design For Financial Services Professionals | Copyright 2021 All rights reserved