We have several decades of stock market evidence that social-investment funds typically underperform the market. So we weren’t at all surprised to read this headline yesterday:
Most large ESG funds trail market benchmark
According to the analysis:
The 10 largest ESG funds by assets have all posted double-digit losses, with eight of them falling even more than the S&P 500’s 14.8% decline. The laggards include BlackRock Inc.’s $20.7 billion iShares ESG Aware MSCI USA exchange-traded fund (ESGU) and Vanguard Group’s $5.9 billion ESG US Stock ETF (ESGV).
It’s obvious why these ESG funds have lost so much money this year. They have steered clear of investing in fossil fuels – companies like Exxon and ConocoPhillips – at the very time these traditional oil and gas stocks have soared in value.
When BlackRock CEO has been asked why he is putting politics ahead of his fiduciary duty to his investors, he has indignantly replied that ESG investing yields higher returns
Not usually and especially not in 2022. ESG merely puts the political biases of the big fund managers above the financial returns of the investors.
Oh, and BTW, one of the worst-performing WSG funds has been Vanguard. They just announced this week they are getting out of the ESG business.