There are a variety of reasons why socially responsible funds have outperformed their mainstream peers in the three months since the pandemic began, experts have said.
Guests on the second in our series of podcasts on the future of responsible investing funds, sponsored by Royal London, said little exposure to fossil fuels and stocks such as airlines were just a few of the many factors that played into the performance of ESG funds amid this "humanitarian recession".
Lorna Blyth, head of investment solutions at Royal London said: “Data from Morningstar shows that 65 per cent of ESG large cap focused funds beat global tackers in March, while here at Royal London, our own ESG fund range beat the multi-asset funds we have.
"I think the reasons for the outperformance are that responsible investing [...] portfolios tend to be more concentrated and have little exposure to sectors such as fossil fuels and airlines, which suffered in the sell-off.”
Adrian Lowcock, head of personal investing at Willis Owen, agreed the fall in oil prices and problems faced by airlines were “the starting point” for why ESG funds performed so well.
He said: "This has been a very humanitarian recession, and I think companies that have been seen to try to bend the rules have suffered in share price terms, while those that have been seen to be helping, or wanting to help, have benefited, and that is really about the 'G' - governance - in ESG.”
You can listen to the full episode of the podcast by clicking on the link above or through Acast, Apple Podcasts, Spotify or Stitcher.
Keep an eye out for the next in the series of podcasts on the topic of the future of responsible investing, which will be released next week.
david.thorpe@ft.com
