On August 6, 2019 the Morgan Stanley Institute for Responsible Investing published a white paper entitled, “Sustainable Reality: Analyzing Risk and Return of Sustainable Funds.”
The white paper “analyzed 10,723 funds, using Morningstar data on exchange traded and open-ended mutual funds active in any given year from 2004-2018. The key findings:
- There is no financial tradeoff in the returns of sustainable funds and traditional funds. No consistent or statistically significant difference in total returns existed between ESG-focused and traditional mutual funds and ETFs.
- Sustainable funds may offer lower market risk. Sustainable funds experienced a 20% smaller downside deviation than traditional funds, a consistent and statistically significant finding.”