On June 16, 2017 CNBC reported that “the truth is finally staring to emerge about socially responsible investing,” citing both recent performance data and academic research, including a 2013 meta-analysis of 25 primary studies on SRI performance.
The article profiles a range of SRI options, including those with emerging markets coverage, and summarizes SRI performance in the following bullet points:
- “Socially responsible investing funds perform as well as traditional stock funds.
- As algorithms to identify ESG (environmental, social and governance) factors improve, there’s a better chance for SRI outperformance.
- SRI funds face two major hurdles: Any actively managed fund will struggle to beat an index fund, and any fund with an annual fee higher than the cheapest traditional index fund or ETF version starts at a disadvantage.
- Socially responsible funds that focus on excluding stocks, rather than identifying stocks that score highly on ESG metrics, have a harder time generating good long-term performance.”
According to the article, “(m)oney is pouring into sustainable investments, which has surged by more than $2 trillion in the last two years. Demand is growing as clients want to increasingly invest responsibly.”
Unfortunately, misconceptions about SRI being synonymous with exclusion continue, demonstrated by the URL title of the article, which is “how-to-win-in-socially-responsible-investing-dont-exclude-bad-stocks.html.”
You may read the article on the CNBC internet site.