Best and Worst ESG Funds of 2020 So Far

There's a wide gap between the winners and losers of 2020. We look at the top and bottom performing ESG funds of the year so far

Annalisa Esposito 9 November, 2020 | 9:41AM
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Best Worst Funds

In a volatile year for global stock markets, the chasm between the best and worst performing funds is a wide one. So how have sustainable funds held up through 2020 so far?

We have looked at UK-domiciled, actively managed funds to determine which are the top and bottom performers in the year to date. While the strongest fund is up an incredible 55%, the weakest is down by 32.9%. 

The data shows that investing with ESG factors in mind doesn't mean giving up on juicy returns, even during an unexpected bear market. But clearly investors must still do their homework when choosing a fund. 

Best Performing ESG Funds

The five-star rated Baillie Gifford Positive is the best performing fund this year, returning a hefty 55.5%. Needless to say, the fund has beaten its benchmark: while it aims to outperform the MSCI AC World Index by two percentage points a year, it is actually ahead of it by a considerably larger 35.5 percentage points.

What helped its performance is having a heavily concentrated portfolio of just 31 holdings, showing how picking the right companies can make you reap large rewards.

According to Morningstar Direct data, the main contributors to performance have been electric vehicle manufacturer Tesla (TSLA) and American biotech company Moderna (MRNA). Particularly Tesla, which is its largest holding, has had a stonking year and share price has soared an incredible 800%.

In second position, hot on its heels, is the five-star rated Baillie Gifford Global Stewardship, which has returned 54.8%  In this case, among the main contributors to its performance are video conferencing platform Zoom (ZOOM) and California-based biotech company Denali Therapeutics (DENI). Both companies have benefited from the pandemic crisis as people have been working remotely and the need of a vaccine has become crucial.

Name Morningstar Category Return (%)
Baillie Gifford Positive Change Global Large-Cap Growth Equity 55.5
Baillie Gifford Global Stewardship Global Large-Cap Growth Equity 54.8
Ninety One Global Environment Sector Equity Ecology 27.3
Liontrust Sustainable Future Global Growth Global Large-Cap Growth Equity 18.6
Janus Henderson Global Sustainable Equity Global Flex-Cap Equity 17.9
Rathbone Global Sustainability  Global Large-Cap Growth Equity 17.0
CCLA CBF CoE Global Equity Income  Global Equity Income 15.7
VT Gravis Clean Energy Income  Sector Equity Alternative Energy 13.8
Stewart Inv Asia Pacific Sustainability Asia-Pacific ex-Japan Equity 13.7
Stewart Inv Worldwide Sustainability Global Large-Cap Growth Equity 13.6

Worst Performing ESG Funds

At the other side of the spectrum are, mostly, sustainable funds with a UK focus. This comes as a little surprise, as the UK stock market has been struggling to catch up with other developed markets, amid uncertainty over Brexit and coronavirus cases on the rise.

The worst performing ESG fund year to date is the three-star rated Schroder Responsible Value UK Equity, down 32.9%. This means that is 10.6 percentage points behind its UK Large-Cap Equity benchmark.

The main detractors to its performance are energy and financial companies – two sectors that have took the brunt of the pandemic crisis. In particular, its second larger holding BP (5.1% of its assets) has halved this year after a dividend cut and slump in oil demand.

Furthermore, half of the funds in the table are also income focused. These are: the five-star rated Unicorn UK Ethical Income, AI Stewardship UK Equity Income, the three-star rated Jupiter Responsible Income, the four-star rated Janus Henderson UK Responsible Income and BMO Responsible UK Income.

Indeed income investors have had a particularly rough time this year, with many companies cutting their dividends in the attempt to support their finances.

Name Morningstar Category Return (%)
Schroder Responsible Value UK Equity UK Large-Cap Equity -32.9
Unicorn UK Ethical Income UK Equity Income -26.6
ASI UK Ethical Equity UK Flex-Cap Equity -24.1
Family Charities Ethical Trust UK Large-Cap Equity -23.8
AI Stewardship UK Equity Income UK  UK Equity Income -22.4
L&G Ethical UK Large-Cap Equity -21.9
Jupiter Responsible Income UK Equity Income -21.6
Scottish Widows Ethical UK Flex-Cap Equity -21.5
Janus Henderson UK Responsible Income UK Equity Income -21.5
BMO Responsible UK Income  UK Equity Income -21.4

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Annalisa Esposito  is a data journalist for Morningstar.co.uk