Global large-cap sustainable funds lost 6.49% on average year to date compared with a loss of 11.95% for the Morningstar Global Target Market Exposure Net Return Index (EUR), for the period ended April 23, 2025.
The period encompasses all-time highs for broad US benchmarks, including the Morningstar US Sustainability Index, which peaked on Feb. 18. The market trended down after the peak, driven by signs of a weakening economy and concerns about announced tariffs on Canada and Mexico, before comprehensive global tariffs triggered a global selloff two weeks later on April 2.
For the first quarter of 2025, before the tariff selloff, global large-cap sustainable funds lost 2.14% on average based on a screen of 1,382 funds. That compares with a loss of 5.43% for the Morningstar Global Target Market Exposure Net Return Index (EUR). The five best-performing funds in this group delivered above-average gains for investors, each posting returns between 10.98% and 14.93% as March ended.
What Has Changed in the Last Six Months?
The returns marked a reversal from six months prior. During that time, Morningstar renamed its Morningstar Sustainability Rating for funds, introduced in August of 2016, as the Morningstar ESG Risk Rating for funds. As before, the top 10% of rated funds are designated as highly sustainable (“High”) and represented by five globe icons, and the bottom 10% of rated funds are designated as “Low” and represented by one globe icon.
A new administration that is skeptical of sustainable and climate-aware investing has also changed the landscape. Shifts in flows have further shaped it: The largest fund by assets in August did not rank among the five largest funds returned by the 2025 screen. Moreover, all five of 2025’s top-performing funds were not leaders six months ago.
Screening Methodology
To find a pool of sustainable funds for 2025, we filtered all open-end and exchange-traded funds down to only those that fall under global large-cap Morningstar Categories. Next, we excluded any remaining funds domiciled in the United States and selected only sustainable investments.
Morningstar identifies sustainable investments as those that “in the prospectus or other regulatory filings” are “described as focusing on sustainability, impact investing, or environmental, social or governance factors. Funds must claim to have a sustainability objective, and/or use binding ESG criteria for their investment selection. Funds that employ only limited exclusions or only consider ESG factors in a nonbinding way are not considered to be a sustainable investment product.” (For more on Morningstar’s Sustainable Attributes, read Framework and Definitions for “Sustainable Investment” and “Employs Exclusions” Attributes).
How the Largest Global Sustainable Funds Fared
Northern Trust World Screened Hedged Equity Index Fund
- Morningstar Category: Global Large-Cap Blend Equity
- Morningstar ESG Risk Rating: Average
The largest fund in our screen, Northern Trust World Screened Hedged Equity Index Fund, has $13.47 billion in assets under management. Originally launched in February 2014, the fund was down 6.43% in the first quarter of 2025, trailing the Morningstar Global TME Net Return Index (EUR).
The fund, composed of 1,334 holdings, is passively managed; according to its prospectus, its objective is to “closely match the risk and return of the MSCI World Custom ESG Index (the Index) with net dividends reinvested.” Morningstar Manager Research notes that the fund “maintains a cost advantage over competitors” as it falls within the “least expensive fee quintile among peers.” The fund’s largest holdings are Apple AAPL and Nvidia NVDA, weighted at 5.19% and 4.13%, respectively.
BlackRock ACS World ESG Insights Equity Fund
- Morningstar Category: Global Large-Cap Blend Equity
- Morningstar ESG Risk Rating: Above Average
BlackRock ACS World ESG Insights Equity Fund, the second largest fund in our list, has $13.4 billion in assets under management. The fund aims to exclude companies with ties to thermal coal, tobacco, and controversial weapons and was launched in April 2021. In the first quarter of 2025, it was down 7.64%, underperforming the Morningstar Global TME Net Return Index (EUR).
Since mid-August, Morningstar has upgraded the fund’s ESG Risk Rating from Average to Above Average. According to Morningstar Manager Research, this actively managed fund seeks to provide a “broadly similar” risk profile to the FTSE Developed Index. The fund currently has 645 holdings, the largest of which are Microsoft MSFT at 4.94% and Apple at 4.34%.
Handelsbanken Global Index Criteria
- Morningstar Category: Global Large-Cap Blend Equity
- Morningstar ESG Risk Rating: Average
Handelsbanken Global Index Criteria, the third-largest fund on our list, has $12.85 billion in assets under management. In the first quarter of the new year, the fund lost 6.4%, trailing the Morningstar Global TME Net Return Index (EUR).
Handelsbanken Global Index Criteria is passively managed and tracks the Solactive ISS ESG Screened Global Markets Index. Morningstar Manager Research notes that the fund “maintains a sizable cost advantage over competitors,” falling “within the second-cheapest fee quintile among peers.”
Cathay Sustainability High Dividend ETF 00878
- Morningstar Category: Taiwan Large-Cap Equity
- Morningstar ESG Risk Rating: High
Cathay Sustainability High Dividend ETF is the only exchange-traded fund out of the five largest global sustainable large-cap funds this year, the only one to focus on Taiwan large caps, and the only one with a 5-globe ESG Risk Rating.
Cathay Sustainability High Dividend ETF was launched in July 2020 and is passively managed, tracking the performance of the MSCI Taiwan ESG Per HD Select 30 Price Return USD. In the first quarter, the fund lost 8.61%, lagging a 5.43% loss for the Morningstar Global TME Net Return Index (EUR). As it comprises just 33 holdings, the fund is highly concentrated. Chip-design company Novatek Microelectronics Corp 3034.TW and semiconductor designer Media Tek Inc 2454.TW are the highest weighted equities in the portfolio at 5.84% and 5.32%, respectively.
Länsförsäkringar Global Index
- Morningstar Category: Global Large-Cap Blend Equity
- Morningstar ESG Risk Rating: Average
With approximately $10.1 billion in assets under management, Länsförsäkringar Global Index was launched in June 2013. In the first quarter it lost 7.66%, lagging the Morningstar Global TME Net Return Index (EUR).
Morningstar Manager Research indicates that this actively managed fund is aligned with the transition to a low-carbon economy, as it has achieved a low Portfolio Carbon Risk score of 4.51. Morningstar Manager Research further indicates that the fund’s involvement in carbon solutions, 18.5%, is nearly 5 percentage points higher than those of its average category peers. It limits exposure to tobacco, thermal coal, and controversial weapons. Composed of 992 total holdings, the fund’s largest positions are Apple (5.92%) and Nvidia (4.66%).
The Top-Performing Global Sustainable Funds in Q1
Tocqueville Dividende ISR
- Morningstar Category: Eurozone Large-Cap Equity
- Morningstar ESG Risk Rating: Average
Launched in April 2001, Tocqueville Dividende ISR returned 14.93% in the first quarter and 12.98% return over 12 months. This actively managed fund ranks in the top percentile of our screen for year-to-date performance and the second percentile of our screen over the past year. Beyond peer funds in the sustainable large-cap space, Tocqueville Dividende ISR has outperformed the broader market in 2025, beating the Morningstar Global TME Net Return Index (EUR).
According to Morningstar Manager Research, “the strategy leans toward smaller, more value-oriented companies than its average peer” and “has continually had more high-yield exposure than the Morningstar Category average during recent years, with the portfolio holding more stocks with high dividend or buyback yields.” Relative to category peers, the fund invests more heavily in financial services and communication services and less heavily in industrials and technology. With respect to environmental, social, and governance considerations, the fund invests more in carbon solutions than its category peers and managers employ screens to remove companies involved in the manufacture and sale of controversial weapons, thermal coal, and tobacco. With 64 total holdings, the fund’s largest positions are German telecom operator Deutsche Telekom AG DTE (5.09%) and German insurer Allianz SE ALV (4.86%).
Tocqueville Value Euro ISR
- Morningstar Category: Eurozone Large-Cap Equity
- Morningstar ESG Risk Rating: Average
Tocqueville Value Euro ISR has $1.44 billion in assets under management. The fund was launched in February 2017 and is up 13.01% year to date and 13.7% over the past year. These return metrics put the fund in the top percentile for both year-to-date and one-year performance.
Like Tocqueville Dividende ISR, Tocqueville Value Euro ISR is actively managed and employs exclusions for securities issued by companies associated with the production and sale of tobacco and thermal coal. Morningstar Manager Research found that, in recent years, “this strategy has … tilted toward low-quality stocks” from “companies with higher financial leverage and lower profitability over peers.” Relative to category peers, the fund is overexposed to utilities and financial services and underexposed to consumer cyclical and technology, though its involvement in both fossil fuels and carbon solutions fall at average levels for the eurozone large-cap equity category. The fund has 57 portfolio holdings, and, similarly to Tocqueville Dividende ISR, features a higher share of assets concentrated in top 10 constituents as compared with an average peer. The portfolio’s highest weighted holdings are drug manufacturer Sanofi SA SAN at 4.93% and Deutsche Telekom AG at 4.35%.
Ginjer Detox European Equity
- Morningstar Category: Eurozone Large-Cap Equity
- Morningstar ESG Risk Rating: Below Average
The third best performing vehicle from our 2025 screen is the $19.36 million Ginjer Detox European Equity fund. Year to date, the fund is up 11.76%, and, over the past 12 months has returned 8.76%, beating the Morningstar Global TME Net Return Index (EUR) over both periods.
Open to investors since July of 2021, this actively managed fund “tends to hold smaller, deeper value companies than its average peer in the Eurozone Large-Cap Equity Morningstar Category” according to Morningstar Manager Research. Ginjer Detox European Equity limits exposure to controversial weapons, tobacco, and thermal coal businesses. Relative to category peers, the fund invests more in the basic materials and financial services sectors, though it is underweight both healthcare and technology by over 5%. The portfolio is composed of only 32 holdings, 49% of whose weights are concentrated in just 10 securities, a deviation from a more typical concentration of 32.9% among peers. The security with the highest weight in the portfolio, 7.06%, is the French bank Societe Generale SA GLE, followed by Intesa Sanpaolo ISP, an Italian bank, at 5.56%.
Tocqueville Value Europe ISR
- Morningstar Category: Europe Large-Cap Value Equity
- Morningstar ESG Risk Rating: Below Average
The next highest performing fund is $584.83 million Tocqueville Value Europe ISR, open to investors for nearly two and a half decades since its inception in March 2000. In 2025, investors in the fund have seen a return of 11.05%, a value well above return for the Morningstar Global TME Net Return Index (EUR). Over the past year, the fund posted a 10.55% return, putting it in the fourth percentile of all investments in our screen.
Morningstar Manager Research indicates that the fund “has preferred larger market-cap companies” compared with peers in the Europe large-cap value equity category. As with Tocqueville Value Euro ISR, the fund also invests more heavily in “stocks with lower quality or the shares of companies with more financial leverage and lower profitability,” according to Morningstar Manager Research, suggesting that its success may “rest on its ability to surpass peers during economic booms.” Out of the five highest-performing funds in our screen, Tocqueville Value Europe ISR is rated the least sustainable, garnering only a 2-globe ESG Risk Rating. While the actively managed fund screens out securities associated with tobacco, controversial weapons, and thermal coal, its overall exposure to fossil fuels is 5% higher than that of an average peer. The fund holds overweight positions for its Morningstar category in both energy and financial services, while managers allocate less capital to the consumer cyclical and industrials sectors. The fund is composed of 58 holdings, of which British bank HSBC Holdings PLC HSBC and Swiss biopharmaceutical giant Roche Holding AG ROG are most highly weighted, at 4.58% and 4.42%, respectively.
Allianz Actions Euro Innovation
- Morningstar Category: Eurozone Large-Cap Equity
- Morningstar ESG Risk Rating: Above Average
The $119.43 million Allianz Actions Euro Innovation Fund has produced a 10.98% return for investors in the new year, generating gains for investors well above the average year-to-date return for funds in this pool and a negative return for the Morningstar Global TME Net Return Index (EUR). This actively managed fund is the oldest of the five highest performers in our pool, incepted in July 1995, and it receives the best ESG Risk Rating of 4 globes. Over the past year, the fund’s 10.98% return has also put it in the fourth percentile of all investments in our screen.
According to Morningstar Manager Research, the fund “has constantly held more illiquid stocks, evidenced by holdings’ low trading volume, resulting in higher liquidity risk exposure than peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets.” According to fund literature, managers exclude securities related to the production and sale of controversial weapons, tobacco, and thermal coal. In actuality, Morningstar Manager Research suggests that the fund “exhibits 9.76% exposure to controversial weapons.”
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
