Because of their heavy weighting in technology stocks, many large exchange-traded and mutual funds that use environmental, social and governance criteria outperformed the broader market during the COVID-19 pandemic, according to S&P Global Market Intelligence.
The S&P analysis found that 14 of 17 funds studied, each of which had more than $250 million in assets under management, posted higher returns than the S&P 500 this year through July 31, with those outperformers rising between 1.8% and 20.1%. In comparison, the S&P 500 was up 1.2% as of July 31.
An analysis of the same group of 17 ESG funds in May found that all but two had lost value in the year to date.
The top performer in the study was the Brown Advisory Sustainable Growth Fund, which gained 20.1% year to date. The second-highest performer was the Nuveen Winslow Large-Cap Growth ESG Fund, with an increase of 19.7%. The Putnam Sustainable Leaders Fund came in third with a gain of 10.8%.
The only two ESG funds in the group that S&P studied that have posted negative returns year to date were the Neuberger Berman Sustainable Equity Fund, which is down 0.4%, and the Parnassus Endeavor Fund, which down 3.2%. Both those funds' year-to-date showings have improved since May.
Information technology stocks comprise at least 20% of the holdings for each of the funds reviewed, according to S&P Capital IQ data.
As of July 31, technology stocks accounted for about 36% of the Brown Advisory Sustainable Growth Fund and about a 47% share of the Nuveen Winslow Large-Cap Growth ESG Fund. Tech stocks, in comparison, made up about 28% of the S&P 500 at that time.
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