Analysis: Investing in Social Good is Finally Becoming Profitable
Impact investments, which aim to promote a social good or prevent a social ill, have significantly outperformed traditional bets during the coronavirus pandemic. And their returns are enticing hesitant investors to rework their portfolios.
Impact investing typically focuses on three categories: environmental, social and governance, known as ESG. Returns can be tracked through various exchange-traded funds. For example, the S&P 500 technology ETF is up 25% this year, while the S&P 500 energy ETF, which includes oil and gas stocks, is down 34%.
Overall, 64% of actively managed ESG funds beat their benchmarks versus 49% of traditional funds through the first week in August, according to research from RBC Capital Markets.